What are the benefits of a Top up Loan on Home Loan?

Many reputed banks offer a top up loan to existing home loan borrowers. The tenure of this loan can be anywhere between 15 and 20 years. It will mainly depend on the term of the home loan.

Even though the tenure of top up loans is based on the home loan term, many banks decide the tenure on the basis of their evaluation. They consider several factors like the borrower’s repayment capacity, credit history, value of the property and outstanding home loan amount. Only when the criteria are met, the bank sanctions the loan amount. Usually, the top up loan and outstanding home loan amount does not exceed 60% of the property’s market value. 10 Lacs INR is the maximum limit under this type of loan.

What are the benefits?

You can apply for this loan and use the amount for meeting personal requirements such as, furnishing a house, high education, purchasing furniture, business needs, marriage purpose or to meet medical needs. According to experts, if borrowers utilize this loan for acquiring add-ons to their existing home or to make certain modifications or renovations, they can claim tax benefits for the same.

Compared to applying for a personal loan, the process for top up loan application is shorter and simpler. Since you will be an existing customer of the bank, you will get it done easily.

Choosing a reputed home loan lender

It is very important to choose one of the reputed home loan providers in Mumbai. Only when you get a good lender, you will get to enjoy attractive interest rates and other benefits. From understanding documentation requirements to learning more about the different types of loan requirements, there is a lot of preparation that should go into obtaining a loan.

How top up loans work

A top-up loan is the add-on loan that one gets above their home loan. It allows you to avail an amount of money on your home loan when you need some extra funds on an urgent basis. This loan is an additional loan given to you by the bank on top of your home loan. A top-up loan is usually offered after a few years of taking a home loan.

How a top up loan works?

A top up loan allows you to get an extra loan on top of your existing home loan. The top up loan on home loan gives you the privilege of taking an additional loan on the home loan you have already taken. This top-up loan is granted only if you have an impeccable loan repayment track. 

Are you eligible for a top-up loan on your home loan?

You can only get a top up loan if you have a home loan on which you can top it up. The home loan providers in Mumbai, which are the banks, might provide you top up loans on your home loan. And if not, you can transfer your home loan to another bank that offers top up on the current home loan. Though the terms and conditions of each bank vary, there is a need to wait for a period and clear some of the home loan amounts to take a top up loan. 

What would be your tax benefits?

Tax benefits on top up loans are determined by the reason for which the loan is taken. The tax deductions on home loans are based on the interest rates. So if you’re paying EMIs for your home loans, the interest component for this EMI can be claimed for deduction. You can also claim a deduction for the principal too.

What you should know about Home loan against Property?

Loan against a property is provided when you are looking forward to invest in real estate. Home loan is provided at a certain percentage based on the market value of your existing property. Ideally the percentage falls between 40% - 60%.

It is not a hard and fast rule that you have to buy a home against a home loan for a property. There are companies and banks that provide personal loan. But, if you are unaware then loan interest is something which can make or break your deal. Personal loans offer higher interest rates and they vary between 16% - 21%. But taking home loan against a property means you will have to pay interest at the rate of close to 15%. These statistics may vary. But there is a huge difference for sure between these interest rates whatsoever. Though, the preferred option can be Home loan against property.

If you are applying for a loan against property through Bank, below is the process involved in its application:
•    If your property has owners more than one, then it is viable that you apply for the loan together.
•    Bank checks all the documents related to your property and verifies electricity, telephone and residence proof. Identity proof such as Pancard, Passport, Aadhar card or a Voter ID card have become a must submission at a bank. (Any one or any of the combinations are must submission for a loan at a bank).
•    Not just this, if you are employed or self-employed bank requires bank statement for the past 6 months and 2 years respectively.
•    The minimum age for borrowing a loan is 24 years and maximum is 60. For a self-employed individual the age limit is 65.

Bank reviews your credit limit by going through your timely payment track of other bills etc, before giving an OK for any Property loans. Based on the information collated, bank decides whether to give consideration to your loan or no.

The general rule for buying a property and for applying a loan request depends on solid reasons and assurance of your repayment for that loan. Hence, suggested; Do your study well. Get in touch with the bank or the financial company and be prepared with the documents asked for to avoid delay in the process of home loan for buying a new property.

Are You Planning to Apply for a Mortgage Loan in Mumbai?

Mortgage loan, also known as mortgage, can be obtained through an online broker, bank or an independent mortgage broker. Whether you are an individual mortgaging your home or a business mortgaging your commercial property, you need to pledge property owned for refinancing a loan or to buy residential or commercial real estate. 

If you are planning to apply for a mortgage loan inMumbai, make sure you have chosen a reliable lender. Since the property purchased will be used as collateral or security for obtaining the debt, it is important to know whether or not the lender is safe to deal with. In case you default on the mortgage payments, the property will be sold by the lender under foreclosure. 

Are you eligible to apply for mortgage loan?

Income and employment details are taken into consideration when accepting or rejecting a mortgage loan application. Income details help in assessing whether or not the applicant can handle monthly payments of the loan. There are mainly three important aspects that are considered by lenders when sanctioning a loan:

1.       Down payment

2.       Credit score

3.       Monthly income 

Types of Mortgage Loans

Fixed rate mortgage- this is one of the most popular mortgage products, carrying a fixed rate over the loan period. This type of mortgage is not influenced by increase or decrease in interest rates because the rates are locked and payment amount remains the same

Adjustable rate mortgage- this type has a fixed interest rate for a certain period. This type of mortgage fluctuates as per changes in market interest rate once the fixed rate period is complete

Whether you apply for a mortgage or home loan online, interest rate, payment amount, pre-payment and term are some of the common characteristics of mortgage.