A financial emergency can occur at any time, and in such a situation, you may inevitably apply for a loan to get the desired funds. Read on to know more about one such loan option – Top-up loan.
As the name suggests, top-up loan is an additional or extra loan you borrow over and above your existing home loan. Many people, nowadays, opt for a top-up loan to meet their financial needs during an emergency or for any personal use. Applying for this type of loan is an excellent alternative to availing a personal loan or liquidating assets like gold or property.
Applying for a home loan top-up on an existing home loan is an excellent option as they are readily available at the competitive interest rate.
Who can apply for a top-up home loan?
Anyone who has an existing home loan with any lender can apply for a top-up home loan. Generally, the lenders assess the applicants’ eligibility before approving the top-up loan request. One of the prerequisites that the majority of the lenders have is that you must have paid the EMIs of your existing loan on time.
The lenders assess the borrower’s track record of repayments to determine the top-up home loan eligibility. And, generally, such loans are approved based on the terms and conditions of the original loan.
When to use a top-up home loan?
Often loan borrowers feel confused about what is the right time to borrow a top-up loan. The truth is, there is no specific correct answer to it. You can apply for a top-up home loan at any time you want when a requirement arises.
For example, if you are planning for holiday with your family and you need funds for the same, you can apply for a top-up loan and use the amount for your holidays. Just like a personal loan, the lenders usually don’t have any restrictions on the end usage of the amount.
Thus, you can use a top-up loan for any purpose you want as you deem fit. You can use it for meeting personal and business expenses. Be it paying for medical bills, children education, buying a car, business expansion etc.
Applying for a home loan top-up is an ideal way to get the funds during unforeseen situations. Another significant benefit of applying for such loans is that the top up home loan interest rate is quite affordable compared to unsecured finance options like a personal loan. Additionally, unlike other loan options like a gold loan or a LAP, you need not pledge any asset with the lender.
Not to mention, the process of applying for a home loan top-up is simple and convenient. Since you already have an existing loan with the lender, you may already have submitted all the necessary documents. This means you need not go through the documentation hassles once again to get the funds.
It is also a convenient option to get the funds if the requirement is high. You can get a comparatively higher loan amount and enjoy the flexibility of repaying the same over an extended period.
Thus, a top-up loan is a great way to get the desired funds during an emergency or for any other personal purpose.