To avail a top-up loan, you must already have an existing loan from the lender which he/she is currently repaying. These loans can be described as an additional amount which the lender offers
Features of a top-up loan
Lower rates of interest: The interest rates on top-up loans are comparatively lower to other loans as it is only given to borrowers who maintain a healthy credit score.
No end-usage restriction: Top-up loans have no end-usage restriction. Therefore, it can be used for multiple reasons such as funding your child’s abroad education expenses, renovating your home, etc.
Higher grant amount: The loan amount provided can be up to Rs. 50 Lakh.
All-time Access: You can keep track of your loan from the online portals of financial institutions.
Income tax benefits: There are tax benefits as well to availing a top-up loan. You can avail income tax exemption of up to Rs. 30,000 on the interest paid under Section 24(b). In case you use the loan for education purpose, the entire interest on such is exempted from tax under Section 80E for up to 8 years.
Easy availability: An individual can easily avail a top-up loan as most of the formalities associated with the initial loan are already executed by the lender.
You can avail a top-up loan upon refinancing, which you can use to foreclose or pre-pay an existing loan without any additional charges and thereby pay a lower rate of interest.
Additional Read: Why Get A Top-up Loan?
