Benefits of Taking A Top-up Loan Over A Fresh Loan

When the loan amount sanctioned by a lending financial institution to a borrower does not cover the related housing expenses of the borrower, they often look for other flexible options. Various lending institutions offer the facility of a top-up loan instead of a fresh loan. 

 What are the benefits of a top-up loan? 

In order to understand why availing of top up loan is a more feasible option than a new loan, here are a few essential benefits of top-up loans. This offers the required financial assistance to meet the borrower’s excess housing expenditures. Moreover, it is available at comparatively low interest rate and involves a seamless disbursal process. 

1.Affordability 

Top-up loans are usually offered at comparatively lower interest rates than personal loans or loans against property. This acts as a crucial benefit in reducing the credit burden of borrowers. 

2.Less requirement on eligibility 

When top-up loans are availed from an existing financial company that has sanctioned the home loan, the stringent policy on eligibility requirements does not apply. Instead, this type of additional loan is approved based on the repayment history of the existing home loan.  

3.Easy repayment

Usually, the repayment tenor of a top-up loan is directly proportional to an existing home loan tenor. This allows a borrower to conveniently pay the EMIs through the extensive tenor without any financial burden. 

4.Flexible usability 

Finally, individuals can use this loan as per their needs and preference. Though home loan comes with user restrictions, the end-use of top-up loans is not limited to one specific type of expense. This means one can use the amount for home renovation or meeting medical expenses or many other financial obligations. 

The versatility of top-up loans allows borrowers to cater to all their expenses in simplified and hassle-free ways. Moreover, the involvement of a seamless process and minimal paperwork offered by financial institutions helps borrowers get the amount during emergencies.