A top-up loan is a loan granted by the bank in addition to your home loan/personal loan. Just like you top up your mobile balance if your balance is low, similarly, banks give top-up loans on your current balance.

Top-up loan interest rates are available at the same rates as home loan/personal loan rates. Some banks keep top-up loan rates a few points higher than the original loan rate.

Now, how can this be considered a cheaper option?

You see, the interest rates on home loans are lower than those on personal loans (almost 4-5% less). So, if you take an additional loan on your home loan, it will cost almost 4 to 5% less than the new personal loan and you will be able to use this addition to meet your personal expenses.

How to use a supplementary loan?
While a home loan can only be used to purchase a home, a top-up loan has no fixed use of funds and can be used for any expenses, just like a personal loan. Therefore, a top-up personal loan can virtually be used for any purpose – whether it is to pay for household expenses, medical emergencies, education or even the purchase of a vehicle.

The top-up loan is available for a period of up to 20 years or for the duration of the balance of the original home loan.

️The main advantage of a top-up loan is that it can be obtained at relatively low interest rates. Regular interest rates for personal loans range between 11% and 24%. However, the interest rate for a top-up loan is closer to the rates offered for home loans.

Source:- Financial Express
Credits: @shreyaakapoor_
.
.
.
.
.
.
.
.
.
.
#home loans #personal loans #money management #saving money #personal finance tips

Please take the opportunity to connect and share this video with your friends and family if you find it useful.