Imagine that you’ve already taken a home loan and have been regularly paying EMIs for over a year now. Everything is going well and you’re on top of your finances. You have saved some money and have an emergency corpus of Rs.2 lakh in the bank to meet any emergency expenditures.
While it’s a wise strategy to save for emergencies, more often than not the amount needed far exceeds the saved corpus. In such cases a top-up loan comes handy. Read on to understand this type of loan and what it entails. First, let’s look at the benefits.
Competitive interest rate
This is one of the main benefits of opting for a top-up loan. The interest rate on these loans are lower as compared to that of a personal loan. In fact, the interest rate is only 1-2% more than what you get on a home loan. Moreover, the payment tenor can be for long periods, allowing you to better manage your expenses.
Freedom of choice
A home top-up loan, contrary to its name, can be used for any purpose and not only for purchase of a second home or spending on a home improvement programme. This is unlike a car or two-wheeler loan, in which the funds can only be used for that specific purpose.
Now let us look at the drawbacks that also form part of the package.
Limited reach
Top-up loan is not as widespread as one would like. It is still offered only by a small number of financial institutions and is not readily available. It might so happen that even the bank or financial institution that you’ve taken a home loan from, may not have a top-up loan.
Limited reach
Top-up loan is not as widespread as one would like. It is still offered only by a small number of financial institutions and is not readily available. It might so happen that even the bank or financial institution that you’ve taken a home loan from, may not have a top-up loan.
Not for new applicants
Another hiccup that can come between you and a top-up loan, is the duration with your current home loan. You need to complete a specified tenor with your ongoing home loan to be eligible. And, not just that, you will also need to have a good repayment record.
If you already have a home loan, then it is even easier to get a top-up loan. With Bajaj Finserv you enjoy pre-approved offers on home loans and others that make it easy to avail finance. Know your pre-approved offer by providing a few basic details.
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