Top up loan is a facility provided by banks and other non-banking financial institutions as well that allows you to borrow a certain amount of money over your existing home loans. This loan simplifies the financing process and helps you in saving time.
- Tax Benefits
Like home loans, top up loans also help in claiming tax benefits. This advantage includes a deduction of up to Rs 1.5 Lakhs on the principal repayment under section 80C. However, one thing must be noted that if the property is sold within 5 years then the tax benefit on the top up loan will be overturned.
- No Mortgage required
Another major advantage of availing top-up loans is that it requires no mortgage. Since you have already applied for home loans and then apply for a top-up loan thus they’ll ask for no mortgage.
- Interest Rate
Top up loans often charge 0.5 to 2% higher than the home loan interest rate but still, it is comparatively lower than personal loans.
These loans can last for 10 years. In contrast, personal loans have a tenor of 5 years. If you need a high loan amount for renovations, then you should go for top-up loans. It will also help you in repaying that amount with less hassle.