Long-Term Loans: Six Benefits of a Top-Up Home Loan

Nowadays, when property prices are going up, the majority of individuals choose for a house loan to acquire their dream home. However, it is usual for the loan amount to be insufficient to pay additional expenses such as application fee, interior décor, remodeling expenditures, or property maintenance costs. Top-up loans are useful in these instances. House loan top up is a type of financial assistance provided by banks and financial institutions that allows borrowers to acquire credit in addition to their primary home loan.

Most people can only reach key life milestones such as further education, marriage, establishing a business, or purchasing a car with the support of several additional financial assistance. Long-term loans can assist in seeing these once-in-a-lifetime moments through. The correct sort of loan with reasonable payment conditions may make meeting your responsibilities a breeze.

Long-term loans are commonly characterized as loans with a lifespan that exceeds one year and can extend up to 30 years. This category includes many sorts of loans such as school loans, vehicle loans, house loans, and some types of personal loans. Due to the obvious longer tenure, interest rates are cheaper and many terms and conditions are more lenient than in the short term loans. Many long term home loan benefits are there.

What exactly is a home loan top-up?

Home loan top-up is a service given by lenders that allows borrowers to borrow an additional quantity of money in addition to their existing home loan. Furthermore, house loan top-ups serve as a safety net in times of crisis. For example, if the property developer exceeds the initial budget, costs may rise, and a house loan top-up is the simplest and most seamless way to close the price difference. In this article you will learn about the home loan benefits 2022.

Six benefits of home loan top up:

1. There are no use limitations.

You can utilize the top-up house loan as you see fit, much like a personal loan or a gold loan. You can utilize the loan to satisfy a variety of reasons, including emergency financial needs, medical expenditures, and supporting your child’s education tuition. This is not the case with home renovation loans, which may only be used for repairs and home remodeling (housing structure) reasons.

2. Home loan with lowest interest rate

Personal loan interest rates vary from 9.5% and 25% p.a., depending on the borrowers’ credit histories. Loans against credit cards typically have higher interest rates than personal loans accessible to borrowers from the same bank. Top-up house loan interest rates, on the other hand, are often the same or somewhat higher than the prevailing interest rate of underlying housing loans. This makes top-up home loans one of the cheapest financing choices for existing home loan customers seeking lower-interest-rate house loans.

3. Increased loan amount

In the case of top-up house loans, the loan amount might be up to 50 Lakhs or more. It may, however, be limited to the difference between the initial sanctioned home loan amount and the outstanding loan amount. Personal loans can range in size from fifty thousand to forty lakhs, depending on the borrower’s income and repayment capabilities. The loan amount for a credit card loan is often a percentage of the credit cardholder’s free credit limit. However, some card issuers can provide loans against credit cards that are more than the credit cardholder’s credit limit. Thus, the odds of obtaining a larger loan amount are substantially better in the case of top-up house loans, particularly for people who have a low credit score.

4. Long payback period

You may require a lengthier repayment period to repay your house loan at times. Options including gold loans, personal loans, loans against property, and so on often have maximum payback lengths ranging from one year until fifteen years, based on the bank’s terms and conditions. The duration of a top-up house loan, on the other hand, is determined by the home loan’s remaining payback time.

5. Tax advantages

You can claim tax advantages on a top-up house loan if it was used solely for the building, renovation, expansion, or repair of a residential property. If the loan is utilized to purchase a self-occupied home, the highest tax deduction possible is Rs 30,000. There is no cap on the deduction if the loan was utilized to purchase a rental property. Both of these, however, are subject to the overall percentage tax deduction of ₹2 lakh per annum payable on the interest component of house loans.

6. Rapid processing and documentation

Top-up house loans often take longer to process than credit card and personal loans. Loans against credit cards are often dispersed on the same day as the loan application, while personal loans are granted between 2-7 days. However, some banks have begun to offer pre-approved top-up house loans to current home loan borrowers. Such lenders typically promise to disburse top-up house loans on the same day as the loan application. In terms of speed of disbursement, this allows immediate top-up house loans to compare against credit card loans and quick personal loans.