Here’s Why You Should Opt for Top-Up Home Loans Instead of Gold or Personal Loans

The home loan segment in India witnessed a rapid growth of 18.6% in April 2019 compared to 14.9% that was recorded at the same time the previous year. The various benefits offered by the financial institutions, along with the housing schemes introduced by the government, are considered to be among the primary reasons behind this growth. A home loan top-up is one such incredible facility that lenders offer their customers who are in need of extra funds.

What is a home loan top-up?

A top-up loan is an additional credit that borrowers can avail on top of their existing home loans. The best part about such advances is that they do not come with any end-usage restrictions. From medical emergencies to family trips, you can fund any of your required expenses with such credits.

Also, it provides an extensive range of benefits, such as lower interest rates and other favourable terms that makes it a better option than gold or personal loans. 

Here is all you need to know about the benefits of top-up home loans – 

• Increased affordability

If you avail additional funds, you must consider the affordability of every option on the table. As you are already paying EMIs towards a home loan, you must ensure that the financial obligations are minimal. Hence, in this scenario, top-up loans are an ideal choice. The top-up loan interest rates are marginally higher than that of the existing home loans. However, they are more affordable compared to the interest rates charged on personal loans or credits against gold. 

• Faster processing time

If you require additional cash for an emergency, you will undoubtedly require a credit option offering quick processing time. A top-up loan meets the requirement perfectly. Since these credits are attached to an existing loan, you are not required to go through the rigorous application process and documentation.

Financial institutions usually disburse such advances within a couple of days of submission of an application. Hence, a top-up loan is ideal to fulfil your urgent financial needs.

• High loan amount

Financial institutions offer a higher loan amount in case of a top-up loan compared to personal loans or credit against gold. You can determine the loan amount you are entitled to avail by using a top-up loan calculator.  

NBFCs like Bajaj Finserv offer a Top-Up Loans of up to Rs. 50 Lakh to help existing borrowers fund various additional expenses along with repayment-friendly features like online loan account management facility, etc.

They also provide several offers to ensure the time required to avail such credits is lesser along with simplifying the process. These offers are valid on a wide range of financial products and services, including personal loans, business loans, home loans, etc. You can check your offer by submitting a few required details like your name and contact number.

• Tax benefits

Individuals availing top-up home loans can also avail tax benefits on the interest part paid towards the repayment on such credits. You can claim exemptions of up to Rs. 30,000 each year under section 24(b) of the Income Tax Act. 

However, the available deduction on interest is calculated within the total exemption limit of Rs. 2 Lakh each year. Also, you can only claim the exemptions if the funds are spent on home-related expenses. 

On the other hand, there are no such exemptions in case of the interest paid towards the repayment of gold loans and personal loans. Moreover, personal or gold loans incur higher interest rates from top financiers compared to top-up loans. Thus, top-up home loans can save a considerable amount of money compared to the above-mentioned credit options.

The obvious benefits of availing a top-up loan over personal loans and gold loans are mentioned above. Individuals availing home loan transfer can also benefit from this facility if they require surplus funds.

About Author – Anamika Verma

Anamika Verma holds a strong experience in financial advising and is known for her in-depth knowledge topics such as loan, fund. house finance. She has written more than 1000 blogs and various tutorials on topics related to housing, home improvement etc and is a senior writer at The Finance Town Blog..