A top-up loan is a type of loan that allows homeowners to borrow additional funds over and above their existing home loan. This loan can be used to meet various financial obligations such as home renovations, medical expenses, or debt consolidation, among others. The main advantage of a top-up loan is that it is offered at a relatively lower interest rate compared to other types of loans.
When you opt for a top-up loan, you can access a sizable sanction that is based on the market value of your property and your repayment capacity. The loan amount is typically higher than that of a personal loan, making it an ideal option for larger expenses. Additionally, the repayment tenure is longer than that of a personal loan, which allows for a lower EMI.
One of the key benefits of a top-up loan is that you can claim tax deductions on the interest paid, provided the loan amount is used for a specific purpose such as home renovation, repairs, or extension. This tax deduction is similar to the home loan tax benefits, and it can help you save a significant amount on your tax liability.
In summary, a top-up loan is a convenient and cost-effective way to fund urgent expenses while servicing your home loan. It offers a high loan amount, a lower interest rate, and tax benefits, making it an attractive option for homeowners who need additional funds.
