To realize your dreams, you may occasionally require a second helping hand. What a blessing it would be if someone cared about your goals and was always available to assist you. A top-up loan is one such item that meets the requirements. Top-up best home loans are financial aid that banks or housing financing firms offer so that you can easily realize your dreams with just a little bit more assistance.
A quick guide to everything you need to know about a top-up loan is provided below:
Meaning of a Top-Up Loan
Top-up loans are a service offered by banks, housing finance firms, and other financial institutions that let you borrow money above and beyond your house loan in a specific amount.
Top-Up Loan features include:
Not everyone who has obtained a house loan from a bank is eligible for the top-up loan. Before approving the top-up loan, a number of variables are taken into account. In connection to the repayment of the prior home loan, banks investigate borrowers’ repayment capacity and track records. In exchange for a processing charge, the banks will approve the top-up loan if the credit report is favorable. Banks occasionally forego the processing fees.
Top-up loans are either provided for the length of the outstanding balance on the existing mortgage or for a 10-year period. From bank to bank, the tenure varies.
Compared to your home loans, the interest rates charged on top-up loans are a little higher. Compared to the interest rates on the personal loan, this is really affordable.
You can utilize a top-up loan to meet your personal expenses, such as paying for your children’s college tuition, or to modify or build your home. The sum of the top-up loan, however, cannot be used for speculation.
When taking out a house loan top-up, borrowers should be aware of a few factors
- Documentation is required when applying for a top-up home loan. For some banks, the procedure is similar to applying for a home loan in that the borrower must provide documentation pertaining to their home as well as identification, address, and income evidence.
- Depending on the bank, the loan’s term can change. For instance, whereas the Indian Bank offers a top-up home loan with a maximum term of 10 years, the State Bank of India offers one with a maximum term of 30 years. Some financial institutions, like Bank of Baroda, base the loan amount and term on the borrower’s age.
- The interest rates could be a little bit higher than the rates for home loans. Additionally, they differ based on the borrower’s profile. For instance, Axis Bank’s top-up house loan rates begin at 8.65 percent. According to information from Paisabazaar.com, it ranges from 7.50 to 9.80 percent for SBI.
- The maximum amount that the lender is willing to approve likewise has a cap. SBI, as an illustration, has no cap. The maximum is Rs. 60 lakh for Indian Bank and Rs. 50 lakh for Axis Bank.
- You may also be eligible for tax savings if you take out a second mortgage to build a room or repair or renovate your property.
The Bottom Line
You’ll need recent bank statements, evidence of income, a high CIBIL score, etc. for a top-up mortgage. Learn about the required paperwork and home loan interest rates before you apply for a mortgage. Then, submit them right away to hasten the approval procedure.
You can be asked to provide basic KYC and property-related papers in the case of a balance transfer and a top-up house loan. So now that you are aware of what it is, employ a top-up house loan if you require cash and benefit from all of its features!