If you are in need of extra funds on top an existing loan, you can opt for top up loans. It is similar to adding balance your mobile phone when the balance is low. You can get a this loan on an existing home loan or a personal loan. A few attractive features of this loan is that it is less expensive than a personal loan, minimal documentation and can be used for any purpose.
Check out all the details about a top up loan here. Read on!
A top up loan is a financing option offered on an already existing loan. You can apply for it in case you need funds to renovate your home, medical emergencies, for education, etc. This loan does not cost as high as personal loans. You can also claim tax deductions on the interest paid.
For example, let’s say you have take a home loan of 50 lakh for 20 years. In 5 years the principal amount stands at 38 lakh. Now, at this point, you need a loan for either renovating or furnishing the house. Apply for a top up loan, that will have the same tenure at the existing home loan, to meet your financial needs.
All banks and financial institutions provide top up loans. However, you must be a customer and have an existing loan with the bank or financial institution to avail of the this loan. If you do not already have a personal or home loan, you cannot get a top up loan.
Step 1: Connect with your existing lender to know whether they offer a top up personal loan.
Step 2: In case your existing lender does not provide a top up, you can shift your loan to another lender by opting for a balance transfer.
Step 3: After getting details from a lender, fill out the online application form.
Step 4: Submit the necessary documents.
Step 5: On approval, you will receive the top up amount on your bank account.
If you have an existing personal or home loan, you can apply for a top up loan to meet your financial needs. However, you must check your credit score and the top up loan interest rates. Because there’s no restriction on usage, you can use the fund to meet other expenses as well. However, you must repay the loan EMIs on time to prevent your credit score from falling below 750. This will assure your credibility as a borrower to the lender.
Top up loans provide much-needed relief to existing borrowers if they overstretch their estimated spending limits. Since personal loans are more expensive, a top up loan can reduce the financial burden in case you need extra funding for home or personal expenses. It is a great option if you are looking to avail of restriction-free end-usage funds. If you want to opt for a hassle-free home loan or personal loan at competitive interest rates, install the Navi App on Android or iOS today!
Ans: Yes, you can avail income tax deduction of up to Rs. 2 lakh on a top up loan interest under Section 24 of the Income Tax Act.
Ans: Yes, several lenders offer foreclosure facilities to repay the loan amount before the end of tenure.
Ans: The documents required for a top up personal loan are:
Identity proof such as Aadhaar
Proof of address (Passport, utility bill, etc.)
Previous 3 months’ bank statements
Salary slips for the last 3 months
Passport size photograph
You cannot take a top up loan from another bank. To do so, you must transfer the existing loan to another bank first.
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