Home Loan Balance Transfer Vs Home Loan Top-Up - Which One Is Better? - Home Loan Stories

25 JUNE, 2021

When servicing a home loan, you can opt either for a Home Loan Balance Transfer or for a Top-Up Home Loan depending upon your requirements. While one of these facilities will help reduce your overall cost of borrowing, the other one can be extremely helpful in meeting additional fund requirements. Let us understand some details about Home Loan Balance Transfer and Home Loan Top-Up, and which one you should opt for in different situations.

Home Loan Balance Transfer

A Home Loan Balance Transfer is a facility that allows borrowers to pay off their outstanding home loan amount with a different lender that offers lower interest rate and more favourable loan terms
Since you can repay your outstanding home loan amount at a comparatively lower interest rate, you can save a large amount and reduce the cost of borrowing
It’s also possible to opt for a longer home loan tenure with your new lender and customise your EMI plan to make repayment easier
Home Loan Balance Transfer doesn’t block the prepayment facility. Thus, you can foreclose your home loan at your discretion. However, do not forget to make a note of the prepayment charges beforehand
Before transferring your home loan to a new lender, you must check the number of EMIs remaining with your existing lender and calculate the total interest amount you would be paying over the remaining tenure
With the help of a Home Loan Balance Transfer calculator, check the total amount you will be saving by switching your home loan to a new lender.

Home Loan Top-Up

A top-up loan is provided to the borrowers over and above their home loan. The purpose of a Home Loan Top-Up is to help borrowers fulfil their financial requirements with ease.
The amount availed through a top-up loan can be used for a variety of purposes such as home renovation, educational purpose, debt consolidation, meeting medical expenses, etc.
You won’t have to pledge any collateral while availing a top-up loan. This is because your home loan is already a secured loan.
Top-up loans can be availed easily as the bank would already have all your necessary information and documents because of the home loan. Moreover, if you are on good terms with your home loan provider, and have a good repayment record, your top-up loan can be processed instantly.
It’s possible to avail tax benefits on the top-up loan if you have utilized the loan amount for home renovation, construction, or extension
One major benefit of this loan is that you get it at a lower interest rate compared to a personal loan or other unsecured loans. Even the repayment tenure that you get is longer than other loans like a personal loan, education loan, and others

Both Home Loan Balance Transfer and Top-Up Home Loan have their own benefits. While one reduces the loan cost, the other offers you an immediate fund to take care of your monetary needs. With Kotak Mahindra Bank, you can opt for either of these loans based on your needs with an online interface that makes documentation extremely easy.

Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.

Home Loan Balance Transfer Vs Home Loan Top-Up - Which One Is Better?

Latest Comments