Owning a home is a dream cherished by many as it is often the most significant purchase in an individual’s life. To fulfill this dream, people usually rely on home loans, which are among the longest-term financial commitments. However, situations may arise where additional funds are required even after taking a home loan -- be it for completing the purchase, construction, or other expenses. In such cases, a top-up home loan can be a practical solution.
Instead of opting for a high-interest personal loan, borrowers can choose a top-up home loan, which usually comes with lower interest rates and attractive deals. This loan is offered to individuals who already have an active home loan.
Here are some key features of a top-up home loan:
- With a top-up home loan, customers can borrow additional funds over and above their existing loan amount.
- Often, there are additional expenses beyond the home loan. A top-up home loan can help cover these costs.
- With a top-up loan, customers often get a good deal from their existing lender. This helps reduce the overall cost of borrowing.
- A top-up home loan is an affordable solution to manage your debt.
- If the customer repays the home loan for 12 months without missing any EMI, they become eligible for a top-up home loan.
- The amount sanctioned by the bank for a top-up loan will also depend on the monthly installments repaid under the regular home loan. This means the customer will not have to apply separately for a personal loan.
- If a customer chooses a shorter repayment period, top-up home loans can be quite beneficial for them.
- The tenure of a top-up home loan varies across different banks. For example, the State Bank of India offers top-up home loans for a tenure of up to 30 years.
- The interest rate on a top-up home loan is generally slightly higher than the rates for regular home loans. This rate also depends on the customer's profile.
- The difference between the interest rates of a home loan and a top-up home loan is usually between 1 to 2 per cent.
ALSO READ: Can rent rates really cover 100% of my EMIs? Explained
