In finance, a loan is the lending of money by individuals, organizations, or other entities to other individuals, organizations etc. The recipient (i.e., the borrower) incurs a debt and is usually liable to pay interest on that debt until it is repaid and to repay the principal amount borrowed.
For those with existing loans seeking monetary support, top-up loans may be the best option.
It can fulfill all your short-term and personal business needs.
It is cheaper than commercial loans.
What is the Top-up loan?
As the name suggests, a top-up loan benefits the borrower beyond the original loan. The tenure period for this type of advance is generally between five and ten years. This type of advance is available to borrowers with an existing home or personal loan. These loans are very easy to obtain, but banks must meet certain criteria before approving them. If your bank does not offer top-up loans, you can transfer your balance to a lender that offers a loan with a higher interest rate. You must be consistent with your loan payments to get approved for any top-up loan.
- You can only choose a top-up loan if you already have a personal loan or a home loan from the same lender.
- The tenure of a home loan can be up to ten years, while a personal loan can last up to two years.
- The amount of your loan approved for your top-up loan will depend on the amount of your outstanding personal loan or home loan.
- Repayment history and your CIBIL play a significant role in approving your top-up loan.
- You can get a top-up loan at the same interest rate as your current loan.
Home loan tops are typically provided for home construction, renovation, and purchase. However, personal loans can be accessed for a variety of purposes, including
- If you need urgent funds to meet personal needs.
- If you need short-term funding for your business needs.
- You are looking to get a loan without requiring much documentation.
- For your vacation and marriage expenses.
- If you’re looking for long-term funds with low-interest rates.
Learn more about top-up loans and their benefits:
- It can be used for many personal and professional purposes.
- You will only need minimal documentation. The lender already has your details.
- A lower interest rate than commercial loans.
- Lender tenures that are longer
- Simple repayment option.
Let’s look at an example to understand it better:
You have an ongoing personal mortgage that you took 2 years ago for 5 lakhs. The loan term is for 5 years. You suddenly have a medical emergency and need immediate funds. There are no savings, so borrowing is your only option. Because this is an urgent situation, you don’t have the time or patience to apply for a loan. Then, fill out lengthy documentation and wait for the approval. You want immediate funding.
In such cases, a top-up loan would be the best choice. There is no need to wait for the approval and apply. You have to contact your lender and apply for a loan. You can fulfill your needs if you meet their eligibility criteria. Funds will be available within one hour.