A top up loan basically allows you to avail a loan amount on top of your home loan. The usual loan tenure is about 10 years and is often offered only after a few years into the home loan disbursal, as this gives a fair idea about your repayment track record, which means no defaults down the line and this also increases your loan eligibility.

The logic behind a top up loan is the fact that you have already started repaying your loan, hence your outstanding loan amount with the bank has already begun decreasing with each payment. A top up just enables you to utilize that margin towards obtaining a loan that you may urgently require to meet some of your needs.

Vinita Mistry took a home loan from her friendly neighbourhood bank two years ago. She bought a cute cozy apartment in a block of 60 apartments in a community enclave, which housed 300 apartments in all. At that time she did not have a four wheeler and rode a trendy power bike to work, which was always parked under the stairway that went up to her 5th floor apartment. She eventually moved office and upgraded to a gorgeous looking small car. Then she had a problem! Parking Space!!.

She figured she needed to buy that additionally apart from her apartment cost. She wished to take a loan to cover the cost of purchasing a parking slot. How can she go about this? Are you stumped like Vinita wanting more amenities or are you looking for some urgent funds, without expensive interest rates attached to it? Well, a top up loan on your existing home loan might just be the answer. Let us understand the various nuances of a top up loan before you decide to shortlist this as an option.

Read more…

Did you like this? Share it: