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06 JULY, 2022
Transferring your home loan to save on the overall interest outgo is a move that could benefit you in several ways. It could also make it easier for you to get a top-up loan from your new lender. It’s common to need additional funds for home improvement or other purposes. And a top-up loan can help you get the funds you need to cover various expenses, such as home renovations or consolidating your debt. Read on to learn how top-up loans after a home loan transfer can help you manage your financial situation.
Features and benefits of a top-up home loan
1. Lower interest rate: The interest on a top-up loan is generally lower than that of a personal loan or home loan. This makes it a more attractive option if you need extra funds for home renovation, family events, or other purposes. A lower home loan balance transfer interest rate means you can save money for your Equated Monthly Instalments (EMIs) every month.
2. No new documentation: Since the bank has checked all your documents already and completed your KYC process, no new documentation is required for a top-up loan. Just submit your documents required for the home loan balance transfer and the ones that prove that you have been making regular payments on your current home loan.
3. Increased loan amount: With a top-up loan, you can get an additional loan amount that can be used for financing future education, home extension or any other purpose. The unique benefit of a top-up loan is that you can use it for a variety of purposes without restrictions.
4. Tax benefits: Another benefit of availing a top-up loan is the tax benefit. If you use the top-up loan to buy or build a new home, the principal and interest components are eligible for deduction under Sections 80C and 24. However, the tax benefits on a top-up loan are only available when you use the funds for repairs, alterations, and other purposes related to your home. If you use the funds for purposes not related to your home such as children’s education, vacations, etc., you won’t be eligible for these tax benefits.
5. Longer repayment tenure: Another benefit of availing a home loan top-up is the flexible repayment tenure. Some banks offer it for 10-15 years and others might offer it for the tenure of the current home loan.
6. No prepayment charges: Another benefit of availing a top-up loan is that there are no prepayment charges. This means that you can prepay the loan amount without any charges.
If you are looking for an additional loan after home loan refinance, a top-up loan could be the best option for you. Whether you need to make repairs or renovations to your home, pay off debts, or cover other expenses, a top-up loan can help you do just that. When you consider taking out a top-up loan, consider using a home loan balance transfer EMI calculator and compare the home loan interest rates offered by different lenders.
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