Need funds for a wedding, travel or a medical emergency? Opting a top-up loan on your existing home loan could be your solution to instant finance.
What is a top-up loan?
This loan allows you to borrow additional funds on your existing home loan. A top-up loan comes as a handy and an easy solution for an immediate fund requirement, as you don’t need to apply for a separate loan.
Why apply for a top-up loan?
The biggest advantage of using a top-up loan is you can use this additional loan amount for anything. There is no restriction on how to use this loan amount and where to use it.
Here’s how a top-up loan can be used:
- To renovate or improve your home
- To consolidate your existing debts
- One-time large purchases like car or a holiday
- To increase your cash liquidity
Additional Read: Steps to Apply for Home Loan Balance Transfer
Why a top-up loan is better than a fresh loan?
Following are the reasons why a top-up is a better idea than applying for a fresh loan
- Avoid multiple loans in your name:This helps you consolidate debt and avoid running multiple loan applications in your name. Having multiple loans can harm your CIBIL score as well.
- No extra charges: If you have an existing home loan, a top-up loan comes without any extra charges. You’ll pay a minimum fee for getting a top-up done on your home loan. However, applying for a fresh loan means can be costlier with fresh processing fees and other one-time charges.
- Affordable interest rates: Interest rates for a home loan are one of the most affordable rates. A top-up loan also comes with an affordable interest rate and is much cheaper than personal loans or credit cards.
- No or minimum documentation: Since the lender already has your documents and verification for the home loan, the documentation for the top-up loan would be just a formality.
- Renegotiate for a longer tenor: Since a top-up loan increases your overall loan amount, you can always ask your lender to adjust your loan tenor. If you increase your home loan tenor by few years, you can keep your EMIs within budget.
- Faster processing: A top-up loan will be processed much faster than a fresh loan. Reason being, your existing lender has already built a relationship with you. Also, your application won’t be treated as a fresh application instead you it will be processed as an existing customer.
Additional Read: How to Finance Your Home Renovation
How to apply for a top-up loan?
If you want to apply for a top-up loan, you can do that with the following steps:
- You can simply apply for a top-up loan online or call the lender
- Fill in your personal, employment, and financial details in the application form
- Mention the top-up loan amount
- Provide details of your existing home loan
- Submit the required documents and fees
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