1. Build your Credit Score
2. Reduce your Current Borrowing / EMI Costs
Imagine having taken a personal loan or home loan, only to realize a few days later that you need more money.
You fear your lender won’t give in to your wish this time unless you repay the first loan.
Thankfully, you’re in luck!
Did you know that you can take an additional personal loan on top of an existing one?
Yes, it is true. You can take what is known as a Top-up loan.
A top up loan is an additional personal loan that you can take on top of your current ongoing loan. The catch is you can only get this when you have given a certain number of EMI payments for the existing loan.
Top-up loans are quite similar to personal loans in that they give flexibility in loan end-use. That means you can use one to fund a wedding, a dream vacation, get money during a medical emergency, renovate your home, enrol in an educational institution, and do a lot more.
The biggest benefit here is that your interest rate remains the same as the original personal loan, and that there is minimum documentation to worry about.
Now that you have seen what a Top-up loan is, let us learn about its many features.
Here are some features of this type of loan:
You can get it only if you have an existing personal loan: A top-up loan is not a standalone loan, meaning that you can’t take one independently. To get one, you need to have an ongoing personal loan.
Loan amount: The maximum amount you can hope for depends on your lender. However, the amount of your top-up loan will not be more than your existing personal loan.
Attractive rate of interest: You can get a top-up loan at the same interest rate as your existing personal loan. Since their interest rates vary from one customer to another, your top-up loans interest loan won’t be the same as your neighbour’s.
Fast processing and disbursal: Since these are given to you if you already have a personal loan from the same lender, it follows that the lender already has most of your required documents. Your documents were already checked previously by the lender, and thus your application for a top-up loan shall be faster.
Flexible repayment tenure: Depending on the tenure of your existing loan, the tenure of your top-up loan can be anywhere between 12 months to 60 months.
You won’t need to give any collateral: There is no need for these things in case of a top-up loan.
You benefit from flexible end use: You can use the loan for any personal need.
Now that we have learnt about its features, it’s time to learn about its benefits.
Need a reason to take a top-up loan? Well, we have way more than one! These are:
It reduces your interest burden: If you have high-interest credit card dues, a top-up loan can help to reduce your debt burden. Thus, you get to consolidate your debt and repay with more ease.
Minimal documentation: There shall be minimal documentation to worry about since your current lender already has copies of your required documents. Besides, you got the existing loan because your lender trusts you and your repayment capacity. That said, the time taken to get a top-up loan will still depend on which lender you are approaching.
Fast processing: Since the lender already knows and trusts you, the application process is faster than when asking for a personal loan.
Attractive interest rates: Your interest rate for a top-up loan shall be the same as your existing personal loan, and never higher than that.
No need for collateral: Your personal loan did not require any collateral, and neither shall the top-up loan. There is no need to have a guarantor either. After all, the lender trusts you!
Consolidate your EMIs: Having to pay EMIs of various loans separately costs you a lot over time. It is better to consolidate your loan and get a lower interest rate. Besides, consolidating your loans means you’ll never miss a payment!
Getting a top-up home loan will provide you with several benefits, such as:
Compared to home loans and personal loans, these come with lower interest rates.
You can use this for anything between constructions to extension to renovation.
You can use it for your business and personal purposes, but only if your lender agrees to it.
If you use it only for home construction and renovation, you get tax benefits.
There is faster loan disbursal.
That’s all well and good, but how do you know you are qualified?
Here’s the criteria you need to fulfil.
You need to have an existing personal loan with the same lender
You can take a top-up loan only after you have paid certain EMIs for your existing personal loans
Your should have a spotless repayment track record
You need to have a stable job or a stable source of income
Your should have a high credit score
You should not have bounced more than one EMI last year.
In case there was a bounce, it should have been cleared before the next EMIs due date.
You need to show a clear repayment of your existing loan.
If you want to combine Balance Transfer with a Top-Up loan, you need to show a year’s worth of unblemished repayment history.
Your age should be between 21 and 65
You should be an Indian citizen
One can be either salaried or self-employed
There are two ways to go about it:
Visit the nearest branch of your lender
Go to the lender’s website and apply online.
Either way, the bank shall get in touch with you in regards to your top-up loan application.