Home loan top-up is an additional loan that is given over and over to an existing home loan borrower. To pay off your need for extra money, existing home loan lenders can get additional loans. These funds can be used for a variety of personal needs, from home renovation to children's higher education, including business-related needs, and financing business activities.
Top-up Home Loans instead of other loans:-
Loan amount: The rate at which a loan is raised is generally based on the Loan to Value (LTV), set by the lender. On average, the loan and interest rate offered does not exceed 75 percent of the current local market value. In the event of another loan option, the maximum loan amount may be higher than the additional loan amount. For example, personal loans increase to Rs. 40 lakhs and a gold loan of Rs. 10 crores and the gold loan interest rate is also low due to the security the lender has.
Processing time: Loan options such as personal loans, credit card loans, and gold loans that offer a higher loan when it comes to loan processing. In particular, instant credit card options - Credit card and gold loan - are issued within minutes or a day. For personal loans, payment is made within 1-2 days. Processing and issuing additional loans usually takes a week, because based on asset inspections, the amount of the loan is finalized.
Loan tenure: The term of an additional loan usually depends on the remaining term of the borrower's home loan. When deciding on a loan term, other factors such as the borrower's credit profile and existing debt are also considered. Loans in the event of a loan increase up to 20 years. Such long-term employment helps if you get a higher loan rate. The term of the loan compared to other loan options clearly shows, for example, a personal loan comes with more than five years and a gold loan comes with 3 years.
Interest rate: The interest rate on additional loans is usually 0.5-1 percent higher than the interest rate on a home loan. The interest rate on home loans starts from a low of 8.35 percent per annum. Compared to other loan options, higher loan rates are still relatively low. For example, the Indian Overseas Bank gold loan per gram rate ranges between 9.24 percent and 26 percent, while interest rates on personal loans remain between 10.65 percent and 24 percent. For existing home lenders, low-interest rates on high loans make it a cheap source of income. Also, high-interest loans can be used to repay other loans that come with higher interest rates.
Tax Benefits: Under the Tax Act, interest and interest paid on a gold loan, personal loan, or credit card loan are not eligible for certain tax benefits. In the case of additional loans, however, tax benefits may be derived from both principal payments and interest paid depending on the expenditure. If the funds are used for home repairs, home repairs, or property conversions, then the interest paid is eligible for deduction under Section 24B. If the loan is used for the construction or purchase of new property, the principal and the repayable interest are also eligible for tax benefits under Sections 80C and 24b respectively.
Conclusion:-
Every loan facility comes with its pros and cons. It depends on the borrower’s situation as to which loan facility suits him best and how much interest rate he will be able to repay and in what tenure. Also, the borrower should be sure about what benefits he needs from a loan and should continue further with it.
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