Factors to Consider Before Applying for a Top-Up Loan on Your Existing Home Loan

By: Homeloan0 comments

Introduction

Are you looking for some extra cash to furnish your new home? If so, you may want to consider applying for a second loan. But don’t!

Instead of applying for a new loan, a top-up mortgage is often the best option. You are of course free to take out another loan, such as a personal loan, but the terms may be more expensive and the application process more time-consuming.

A top-up loan also requires less documentation than a new loan because the lender or bank already has all of your information from your current home loan.

Before we get into the details of what you need to consider before applying for a new mortgage, let’s first take a look at how a top-up mortgage works.

How does a housing loan top-up work?

A home loan top-up is a convenient and easy way to get additional funds for different expenses. You can top-up your existing home loan for a combined amount of not more than 70% of the property’s value.

For instance, if you have borrowed Rs. 75 lakhs from your lender for 10 years and need another loan for refurbishment within 5 years, you can top-up your existing home loan to finance the refurbishment expenses.

You can also top up your housing loan by applying for a loan top-up with your balance transfer housing loan application. HomeLoans4U, the most trusted brand provides you the lowest home loan interest rate.

The best part is that a housing loan top-up works like a personal loan. You can finance any expenses with it.

Factors that are to be considered before applying for a top-up loan

  • The loan tenure varies from lender to lender. Ask your lender for the loan tenure before applying for any top-up loan.
  • The interest rate of the top-up loan may be higher than the interest rate of the home loan. Again, make sure to confirm the interest rate with your lender prior to applying.
  • Lenders may restrict the loan amount they sanction for the top-up loan. Some lenders may only offer loans for certain types of home financing. Therefore, make sure your lender offers a loan top-up that meets your financial requirements or you will have to look for another lender.
  • Top-up loans that are for end-use such as home refurbishing or construction may qualify for tax deductions.
  • The top-up loan prepayment does not attract penalty fees.

Conclusion

All in all, now that you understand how a top-up loan works on housing loan and a few important factors to keep in mind, it is time to apply for a top up loan. If you are looking for a loan at an affordable rate and flexible repayments, look no further than HomeLoans4U.

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