Top-up home loans: Is it a viable alternative to gold or personal loans?

Home loan EMIs are usually paid smoothly by many people. After a while, they realize they need to remodel their home. The number of funds at your disposal, if you are looking to renovate your house, will determine the extent of remodeling.
Top-up home loans: Is it a viable alternative to gold or personal loans?
Here's how you can make your dreams come true with a simple top-up loan. (Unsplash)

By- Alone Virk

Home loan EMIs are usually paid smoothly by many people. After a while, they realize they need to remodel their home. The number of funds at your disposal, if you are looking to renovate your house, will determine the extent of remodeling. Personal loans and gold loans are both common mistakes made by many while looking for top-up home loans. Top-ups for your home loan are the best solution. Here's how you can make your dreams come true with a simple top-up loan. Let's learn what it is and how it can help you.

By securing a top-up loan, all existing home loan borrowers can access additional funds when they need them. In addition to your current home loan, this loan is another loan. Various personal and business needs can be met with this money. If you plan to renovate your house, you can use this money. If you plan to send your child to college, you can use this money for that purpose. If you want to finance your business, you can also use the funds. If you're going to finance your business, you can also use the funds. If you have a consistent repayment record and have paid a minimum number of EMIs, you can apply for the top-up loans. When you are unable to get a home loan top-up from your existing lender,

The top-up loan facility is available if your repayment record is consistent and you have paid a minimum number of home loan EMIs. Consider a balance transfer with IDFC FIRST Bank's simple home loan product if your existing home loan lender does not allow you to top up your loan.

Top-up Home loan against other loans

Amount of the loan:

The top-up loan amount depends on the Loan to Value (LTV) ratio, which the lender sets. In general, Loan Value ratios don't exceed 75 percent of the property's current market value. The maximum loan amount for other loan options may be more significant than a top-up loan. For instance, personal loans go up to Rs. Forty lakhs and gold loans up to Rs. 10 crores.

Time is taken for the process:

When it comes to processing time, personal loans, credit card loans, and gold loans outperform top-up loans. The instant credit card options, such as gold loans and credit card loans, are disbursed within minutes or the next day. In the case of personal loans, disbursement is usually made within two business days. Since top-up loans are finalized based on the evaluation of the property, they typically take a week to process and disburse.

A top-up loan's tenure depends on how long the borrower has left on their original home loan. (Unsplash)
A top-up loan's tenure depends on how long the borrower has left on their original home loan. (Unsplash)

Tenure of the loan:

A top-up loan's tenure depends on how long the borrower has left on their original home loan. In addition to the borrower's credit profile and existing debts when determining the loan tenure. In the case of a top-up loan, the loan tenure can reach 20 years. A more extended repayment period comes in handy when you are getting a more significant loan amount. Compared to other loan options, the gold loan outperforms the personal loan with a maximum tenure of 5 years, while the personal loan comes with a maximum of 3 years.

Rate of interest:

Top-up loans generally have higher interest rates than home loans, usually by 0.5-1 percent. The interest rates on home loans start at 8.35 percent per year. Top-up loan rates remain competitive with other financing options. The interest rates for gold loans typically range between 9.24 percent and 26 percent, while personal loans usually range between 10.65 percent and 24 percent. Top-up loans are the cheapest source of funds for those with existing home loans due to their low-interest rates. Additionally, top-up loans can repay other loans with higher interest rates.

Tax benefit

Gold loans, personal loans, and loans against credit cards do not qualify for any tax benefits under the Income-Tax Act. Tax sops may be available for home loan top-ups. Personal loans, gold loans, and loans against credit cards don't qualify for tax benefits, but a home loan top-up does. It is especially effective if the loan proceeds are used for the construction or acquisition of new property.

Conclusion

There is no doubt that a home loan top-up is a great way to raise funds. Because personal loans and gold loans are pretty expensive, especially if you intend to run the loan for quite some time (very few people can repay within 1-2 years), perhaps it is time for you to move from 'what is a top-up loan' to 'how to get a top-up loan.' Get your dream home with an attractive home loan top-up interest rate and be in complete control of your finances, if you are also considering taking gold loans over a Top-up home loan. In the above paragraph, you get all the information about the gold loan. You have at least one question in your mind that is how can you get a gold loan and how to calculate gold loan interest? Then we have a company called Rupeek. Rupeek is the best online gold loan company. They are giving the best and simplest way to take a gold loan and here you can also calculate the interest rate for your gold loans.

Disclaimer: (This article is sponsored and includes some commercial links)

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