Features and Benefits of a Top-up Loan

Financial institutions extend top-up loan facilities to help borrowers avail of surplus funds on top of their current home loans or a home loan balance transfer. This enables individuals meet all their big-expense commitments comfortably and then repay the loan at their own pace. 

Some of the striking features of a top-up loan include:

No end-usage restrictions - A top up loan can be utilised for various purposes, such as home renovations, emergencies, higher education, etc.

Flexible tenor - The maximum tenor offered usually differs with lenders, which may stretch up to 20 years or until borrowers repay the existing housing loan. 

High loan amounts - Although, the amount of money tendered for a top-up varies across lenders, one can expect to borrow 70% to 80% of the property's value as a top-up.

Low interest rates - Generally, lenders charge the same interest rate for a top-up as for a house loan. However, some lenders may levy higher rates for a top-up as compared to home loans. 

Top-up loans can be extremely beneficial in the following ways:

Cheaper alternative - Borrowers prefer this option as the interest rates on a top-up are lower than the rates of other loans. 

Comfortable repayment - Top-up loans come with a longer repayment tenor as compared to other types of credit. 

Easy approval - Since the borrower is an existing customer of the financial institution, there are brighter chances of obtaining top-up loan approvals. Additionally, approval also depends on loan eligibility and lender policies.

Tax benefits - One can avail of tax deductions if the loan principal is used for extension, repair or construction of a property. Benefits can also be secured if the top-up is utilised for financing children's education as well as for an under-construction house.