With a top-up loan, financing your home renovation or repair is easier. Besides, such loans have no end-usage restrictions, and you can also use the amount to fund higher education, marriage, medical emergencies, etc.
What is a top-up loan?
A loan availed on an existing loan to increase the credit amount to finance several requirements is known as a top-up loan.
While you avail such loans, there are certain points that you should keep in mind, such as:
Interest rates
You get to avail a top-up loan at a lower interest rate which reduces the burden on your pocket. Before you apply for such loans, consider knowing the interest rates and other charges of different lenders and choose the one accordingly.
Documentation process
As top-up loans are availed on your existing loan, your documents already lie with your lender. Hence, you do not have to submit additional documents. This reduces the hassle of the hefty documentation process.
Loan amount
You can avail a high top-up loan amount on your existing home loan of up to Rs. 50 Lakh with which you can meet several financial obligations.
Income tax benefit
Top-up loans provide income tax benefit if used for
Home renovation – Section 24(b).
Purchase or construction of a property – Section 80C, 24(b), and 80EEA.
Higher education – Section 80E.
Additionally, you also get to enjoy pre-payment and foreclosure facilities on your top-up loan. Taking advantage of these facilities helps you to save on interest payments.
Additional URL: Know What Is Top-Up Loan and How You Can Use It.
