Many people in India are still unaware of what a top-up home loan is – it is a loan that a borrower can take in addition to the home loan. It is an ideal way to get extra funds to meet your construction or renovation needs. Please note it is available only to borrowers who have a housing loan with a bank or NBFC. Instead of going through the whole process of getting a loan application approved and the loan sanctioned, going in for a top up home loan has several benefits.
So, let’s look at the reasons why should you go in for a top-up loan and not a new loan?
- The loans are easier to avail as your documentation and verification are already complete and the bank or NBFC can easily extend the loan.
- Application processes are much easier, especially if your repayment history is good and you have a strong CIBIL score.
- Most top-up loans come at lower interest rates, making them a much more cost-effective option.
- The tenor of the top-off loan is the same as a home loan, making the payment easier. It also means the EMI is low, and you can pay off the loan easily and without stress.
- One of the biggest benefits of taking a top-up home loan is the tax benefits the borrower is entitled to for new construction on a property or if the amount is used for home repair. Under two sections of the Income Tax Act, Section 80C and Section 24 you can save taxes on the principal amount and interest repayment.
Read Also: Terms and Conditions for Home Top Up Loan