If you are in need of additional funds for a specific purpose or to address unexpected financial requirements, a top-up loan can offer a viable solution. Top-up loans are a type of loan that allow you to borrow more money on top of your existing loan. This additional amount can be used for various purposes, such as home renovation, education expenses, medical bills or even a vacation.
What is a Top-Up Loan?
A top-up loan is a supplementary loan that can be availed by those who already have an existing loan. This type of loan is commonly offered by banks or lending institutions to those who have already taken out a home loan, personal loan, or car loan. The loan amount is calculated based on the value of the collateral asset (usually the property), the outstanding balance of the existing loan, and the borrower’s credit score and repayment history.
Where to Avail Top-Up Loans?
If you are considering availing a top-up loan, you can check with your existing lender or bank. They would be the best source to determine if you are eligible for the loan, as they already have your financial history on record.
How Much Can You Borrow?
The amount of the top-up loan that you can borrow is calculated based on several factors. First, it is based on the outstanding balance of your existing loan. Depending on the lender or bank, top-up loans can range from 10-70% of the original sanctioned loan amount. The amount can also depend on the property value, age of the borrower, and the applicant’s credit score. Other factors that may affect the loan amount include the purpose of the loan and the expected cash flow or income of the borrower over the duration of the loan.
Benefits of a Top-Up Loan
There are numerous benefits to availing of a top-up loan. For one, it is easier to obtain and has a faster processing time compared to applying for a new loan. Since the borrower has already established a relationship with the lender, they have already established trust and a track record of repayment. The lending institution has access to previous credit reports and payment history, which allows them to determine the borrower’s eligibility.
Additionally, top-up loans have a lower rate of interest compared to personal loans. Interest rates for top-up loans can range from 9-15% depending on the lender and the borrower’s repayment history. In comparison, personal loans can have an interest rate of 18-24%.
Calculating Top-Up Loans
Before availing of a top-up loan, it is important to calculate the total cost of borrowing and monthly repayments. You can use a home loan balance transfer calculator to determine the additional amount you can borrow along with the interest rate, tenure, and monthly installments.
You also have the option of refinancing your existing loan along with the top-up loan, which can result in a lower interest rate and better repayment terms. This is especially beneficial if you have a high-interest rate loan or a variable interest rate loan.
Where to Apply for Top-Up Loans
If you are in need of additional funds and are considering a top-up loan, there are several institutions that offer this option. One such institution is Piramal Finance, which offers top-up loans for home loans, property loans, and lease rental discounting. They also offer refinancing options and have an online home loan balance transfer calculator to help you determine your loan eligibility and repayment terms.
Conclusion
A top-up loan can be a useful source of funds for those who already have an existing loan. It is easy to avail, has a lower interest rate compared to personal loans, and offers faster processing times. However, it is important to calculate the total cost of borrowing before availing of a top-up loan and to choose the lender that offers the best terms and repayment options. With the help of a home loan balance transfer calculator and the right lender, you can avoid financial stress and achieve your goals.