A top-up on the loan allows the individuals to avail extra funds on top of their existing home loan. This option of top-up on the loan is available to people who are halfway through their existing loan and require some extra funds. When filing for a top up on home loan the borrower might not need to go through a complex application process of availing funds from the same lender. Unlike other home loans, a top-up on a home loan allows one to use the funds for different purposes such as debt payment and daily expenses. In this blog, we will talk about top-ups on home loans and how to calculate their eligibility.
Why Do People Choose Top-Up on Home Loans?
A top-up on a home loan allows the borrowers to avail of the same amount of funds without applying for another loan. However, this is not the only reason, there are several reasons why borrowers apply for this loan type. The first one is the lower interest rates. In comparison to home loans, the interest rates charged on top-up loans are quite low. After that comes the benefit of flexibility.
The sum of money drawn from the top-up on a loan can be used for different purposes depending on borrowers’ requirements. Depending on the lender, sometimes the money can also be used for business expansion or related work. Moreover, the tax benefits can be avail from this loan if the money is being used for the house construction, renovation and improvement.
The Eligibility Criteria For Top-Up On Home Loan
The eligibility criteria for the Top Up on home loan is the same as those for other home loans if you are opting for it from the same bank. However, there are still some important factors that you need to keep in mind.
No Missed EMI: It is important to note that when you are going for a top-up on a home loan make sure you have not missed any EMI of the existing loan. The lender will check your loan repayment history and then conclude on a decision. If there is an EMI bounce make sure it is cleared before the due date of another EMI. This will make a good impression on the lender and help you get the funds easily.
Six months Loan Repayment: The bank also put one condition when applying for a top-up on home loan is the clear repayment of an exciting loan. Make sure you have paid the six-month EMI of your existing loan timely and are ready to avail more funds. On the other hand, if you are looking for a loan transfer to another bank, you need to have at least 1 year of clear repayment history.
The general criteria such as age, address proof etc are the same as those of other home loans. However, before proceeding with the application you can use the home loan EMI calculator. It estimates the monthly EMI that you will be liable to pay in addition to the existing monthly EMI amount.
Conclusion
The top-up on home loans offers financial stability to the borrower with a simplified application process. With the lower interest rates it helps individuals to meet their financial needs such as daily expenses etc. Using a home loan EMI calculator will give you insights on your Top-up home loan monthly EMI, interest rates as well as the loan amount you are eligible for. Once you are aware of everything about this loan type you can proceed with the bank application process.