When it comes to home loans, borrowers are entitled to avail several benefits through their existing loan. They can either choose to reduce their financial burden by opting for a home loan balance transfer. When doing so, they can receive a top-up loan from the new lender.
Balance transfer
The said process enables borrowers to transfer their outstanding home loan amount to another financial institution. It allows them to continue their existing loan but under a new lender and also enables to avail the benefit of low-interest rates.
Top-up loan
A top-up loan is often looked at as a cheaper, better and alternative to personal loans. Such an open-ended loan can be availed on existing home loan and serves to meet multiple purposes. It is also cost-effective and a faster option of availing funds in an emergency, as the lender already has all the essential documents to verify.
Top-up loans also offer income tax benefits if used for the purchase, construction, and renovation of a house and for higher education.
Which is a better option?
Depending on the need and purpose of a borrower, the merit of both balance transfer and the top-up loan can be gauged. While housing loan balance transfer allows them to decrease the cost of their loan, the top-up loan helps them avail funds during an emergency.
The former may seem better to those who are looking for an opportunity to save, while the latter would seem more feasible to those who want to fund an immediate financial need.
Similar Read: Which One is Better – Balance Transfer or Top-Up Loan?
