About Top Up Loan?
A Top Up Loan is an option that enables you to avail of a loan amount on top of your loan. Usually, the tenure of a loan is 10 years, and this option is offered after a few years of loan disbursal as give an idea about the repayment track of the customer. If the customer is regular in paying the EMIs and does not seem to default on the loan, then this increases your home loan eligibility.
How does it work?
The top-up loan is offered to a customer when he/she has started paying the Loan and the outstanding loan amount with the bank has reduced with each payment. This loan allows you to use the margin towards getting a loan that you may urgently need to fulfill some requirements.
Utilizing a top-up loan:
This loan is an advantage to people who are in need of cash to meet an emergency. It is like a Personal Loan, but it comes at better interest rates and is based on the current rock rates. One can use this loan for any purpose. The top-up loan on your existing home loan can help you in finding your son’s education or paying urgent bills.
You can use this loan when you have an existing loan like Home Loan, Loan Against Property, Car Loan, and Personal Loan. The eligibility criteria for this loan differs from bank to bank. You can request the same bank where you have applied for the loan. There are few banks that do not provide this facility and therefore you can transfer your loan to a bank that offers this facility. You should remember that to qualify for this loan, you should have an impeccable repayment track record.
The bank checks your outstanding loan amount, the market value of the property and your capability to pay the loan before offering this loan. It is always assured that the outstanding loan amount you owe the bank plus the top-up loan does not extend 70% of the market value of the property. Every bank has its own upper limit, and the loan amount will be restricted accordingly.
There are various Tax Benefits that are associated with this loan, and it all depends upon the purpose for which the loan is utilized.
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