Borrowers are generally only eligible for a top-up loan if they have paid off the IMEs monthly, without default, for at least a year.
Top-up loans are an ideal way to get emergency financing and are considered to be one of the best loan options with a personal loan, credit card, etc. Having said that, experts say that one must first and foremost understand what up loans are all about. Top-up loans are provided by banks or housing finance companies and other financial institutions that allow individuals to borrow a certain amount of money in addition to their home loan. Therefore, these are financing options used by borrowers who already have an existing loan, such as a home loan, from the lender.
In such a scenario, borrowers are usually only eligible for a top-up loan if they have paid off the IMEs monthly, without default, for at least a year. Gaurav Jalan, CEO and Founder of mPokket, says: “A borrower’s repayment history is one of the main determining factors in whether they may be eligible for a top-up loan. When such a loan is approved, it is generally subject to the same conditions as the original loan.
In an emergency, when people are in dire need of money, most typically take a personal loan or liquidate assets like gold and property to get cash. However, experts say that under certain circumstances taking a top-up loan on an existing home loan is a better option in such cases because they are readily available and at a good interest rate.
The biggest advantage of a complementary loan is that the borrower has to provide minimal documentation. Just that the IMEs on their existing loan simply increase to the extent of the additional loan. Since a top-up loan does not require the borrower to apply for a new loan, as it is approved on the basis of their existing loan from the lender, it streamlines the whole process and speeds up disbursements. Therefore, a top-up loan could also be considered an instant financing option.
Jalan says, “This makes it an ideal option when there is an urgent need for money. The end use of top-up loans is generally tied but less restrictive than the original loan.
For example, a home loan can only be used for this particular purpose, but with a top-up loan, just because the loan is tied to an existing home loan, it is not mandatory that the borrower must use the loan. money for home renovation or repair. So a complementary loan can be taken out for repairs or furnishing the house, or for larger expenses such as expanding a business, raising children, medical emergencies and weddings – one can use the complementary loans for any purpose.
Therefore, adds Jalan, “Top-up loans are an ideal option when the unexpected happens or whenever one needs a personal loan or a loan against their property or even gold. In such scenarios, it is a more convenient and hassle-free option.
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