According to RBI house price Index, the growth of the real estate industry has led to a steady increase in property prices in India. Consequently, prospective buyers are opting for home loans to meet their financing needs. Furthermore, lenders also provide facilities like top-up loans through which individuals can avail additional funding on top of their already existing home loan. This facility is provided by almost all financial institutions and NBFCs.
Borrowers who have already started paying off their existing home loan and have not defaulted on a payment can easily avail a top-up loan from the current lender. The period after which a borrower can apply for a top-up loan depends on the lending institution. Apart from that, other features of the top-up loan include –
- Top–up loans have lower interest rates compared to unsecured loans like credit cards, personal loans etc.
- Similar to a home loan, top-up loans also come with an extended repayment period of up to 20 years.
- Borrowers do not have to meet any additional eligibility criteria or furnish documents to avail top-up loans.
One of the advantages of a top-up loan is that they have no end-use restrictions. It can be used to meet several expenses like wedding, educational fees, medical emergency and the like. Borrowers can also avail tax exemptions on their top-up loan if it is being used to fund their children’s educational expenses or for home renovation or extension purpose.
