Banks are becoming buddies of their clients with the help of different types of concept. They are offering quick loan mainly know as top-up loan for which customers don’t need to provide any security or mortgage paper.
Top-up loan:
Top-up loan is the type of loan when a customer satisfies its bank by repaying its debt (home loan installments) on time gets eligible to for top-up. It is second loan against the existing home loan which have little higher interest rate than first one normally 1percent to 2 percent.
So, this facility allows a customer to apply for any type of loan whether it is an education loan, personal loan, marriage purpose etc. Contract of this loan will be ending with the contract of home loan. So, this loan helps customers to decrease their cash expenditure.
Eligibility and limit for borrowers:
If you are repaying your loan amount on regular basis, at least 6 installments, you will be eligible to apply for top-up loan. This is just an extension of limit of your home loan and banker is not concern about how you are going to employ your money. Bankers will just look for your repayment ability and if your installments are coming without any blockage no matters in issuing of top-up loan but if the installments are not been paid on regular basis, then bankers might not get ready to provide this loan.
Secondly, if your property gets high value in the market you will be able to apply for higher loan amount and the ability of the customer to repay his loan and loan amount till now exhausted also taken into valuation of your next credit limit. Although it’s all up to the banks or financial institutes to determine the amount you will be eligible for your top-up.
Few financial institutes have taken a decision to put limit on the top-up loan amount on the basis of loan amount (original home loan amount) while few of them have decided to go with the market value of the assets, ability of the customer to pay back the amount, remaining balance of first loan amount etc.
These loans are separate loans and do not entitle for any tax benefits whereas home loan on the basis of which this loan has been issued gets tax benefits. This type of loan is good to take when there is need of any long term financial necessity. This is very flexible and helps you to save your hard earned money.
