There are a lot of situations in life when you encounter an urgent situation and are in desperate need of money. You in such scenarios, try getting money from friends and family and if help doesn’t come from them you go for a bank loan. There are many bank loan options available in the market. Personal loans are easily available and they are always at your disposal but personal loans have higher interest rates as compared to other loans available in the market. There is also a type of loan which is available with nominal interest rates with easy processing; they are top-up loans.
What is a Top-up loan?
A top up loan is offered to people who already have an existing home loan running. It is entirely different from a personal loan. You will have to make that sure your payments are always made on time and your cibil score is great, banks do not offer loans for bad credit score. Its helps when you are in desperate need of money to fulfill your requirements like medical expenses, etc. The loan accounts do not change when you take this kind of loan.
Eligibility for a top up loan
Top up loans are offered to the existing home loan borrowers. Various lenders have different terms and conditions as far as these types of loan goes. Some lenders lay a qualifying period of 6 months to 1 year to avail a loan, provided you make all your EMI payments on time. If your existing lender does not offer you a loan, when you apply for one, you can transfer your existing loan to some other lender and avail a loan on the same. If you are transferring your loan to some other vendor, you will have to submit all your KYC documents again for the process and this can take a lot of time, especially in cases of emergencies we would suggest you, not to take this step.
Benefits of a top-up loan
There are a lot of benefits of availing a top up loan over other loans available in the finance market. We will site a few of them:
A top up loan is provided to you on the basis of the existing property as collateral. This means you do not have to keep additional collateral to avail the loan. There is also no need to provide additional information about yourself as the lenders already have all your details with them.
This loan is provided to you at a very low interest rate as compared to other loan options. As it is given on the security of your house, it is termed as kind of a home loan.
There are loans which cater your specific interest. For example, a car loan is provided so that the customer can only purchase a car, an education loan can only help you with paying for your education. But this is not the case with a top-up loan, you can use the procured funds however you like and you don’t have to give justifications to your lender on what is the purpose of your loan. Many people smartly opt for this loan with less interest rate and buy things like cars, gadgets which are relatively on the higher interest side. Home loan SBI gives you the best interest rates as compared to other lenders.
The tenure remains same of what was on the agreement of initial loan terms. For example, your primary home loan had tenure of 20 years and you are applying for this loan after 5 years, then the tenure of the top up loan will be 15 years.
The main question is do you really need this kind of loan? If yes, are you spending the loan money the right way? Because if you fail to pay the EMIs on time there might be a possibility you will lose on your property. Getting a loan at desperate times is a solution, but if not paid back on time it can cause a lot of problems.
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