Usually, home loans are high-value financial products that can go up to Rs. 3.5 Crore. The tenor of these loans is thus quite lengthy, going up to 20 years to support convenient repayment.
However, the utility of home loans is limited to house purchases; and there can be numerous situations where the borrower needs additional finance for other expenses. In such circumstances, it is a top-up loan that comes in handier than a full-fledged new loan scheme.
Understanding a Top-Up Loan
A top-up loan, as the name suggests, is an extension of a previously existing advance. As an extension of a credit line, it can only be availed by individuals who are already a customer of a specific financial institution. Effectively, borrowers can avail this facility only if they opt for balance transfer of their existing home loan.
Using a balance transfer facility, borrowers can transfer their existing loan account balance to a different financial institution. Although usually availed to avail better rates of interest, home loan transfer can also be opted for to avail facilities like top-up loans. To know how you can best-use a top-up advance, you must know the benefits it brings along.
Advantages of a Top-Up Loan
The numerous advantages and how one can benefit from a top-up loan are discussed below.
Having multiple loan accounts and individually repaying their debt can be cumbersome. Contrastingly, with this facility, it remains clubbed with one loan only.
No Additional Costs:
Applying for a loan require paying many charges, which a customer need not incur if he or she applies for a top-up credit.
Economical Interest Rates:
The top-up loan interest rate is usually economical, and therefore, convenient for customers. These rates are usually lesser than that of an existing loan.
The documents required for approval are minimal since all essential document requirements are already fulfilled previously with the primary loan.
Extension of Tenor:
When taking a top-up advance, tenor of the existing credit line can be extended for convenient repayment.
Faster Approval and Disbursal:
With most of the documentation and verification already done for the original home loan, approval and disbursal take much lesser time than regular.
How Can a Borrower Apply for a Top-Up Loan?
Once customers decide on going for a top-up loan after evaluating all the features and advantages; the application procedure itself is quite simple. Firstly, the concerned borrower must have already opted for a balance transfer. Customers thinking of fulfilling their urgent financial needs with a top-up loan should follow the steps listed below.
- It can be applied online or offline.
- Fill up the application form with personal, employment and financial details.
- Mention top-up credit advance amount.
- Provide details of the existing loan account.
- Relevant documents with overall processing fees must be submitted. Borrowers can submit the fees via different methods, both offline and online.
Planning finances ahead of application is essential to be able to cater to all debt repayments in time. Subsequently, individuals should check out top-up loan features and advantages before planning their finances. While basic features of this facility aim to provide customer convenience and affordability, its repayment should also be planned to avoid facing any financial instability.