A top-up residence mortgage might be your only option when you find yourself on the lookout for a long-term mortgage, have a working residence mortgage, and don’t need to mortgage a brand new asset to get the mortgage. It can also be one of the handy methods for householders to lift cash.
Here are among the key advantages of a top-up residence mortgage:
Easy and easy eligibility standards
As the lender already is aware of in regards to the creditworthiness of the borrower as a result of ongoing residence mortgage, the top-up requires little to no paperwork. “The borrower must have a clean repayment record with the existing home loan along with documents such as ITR return, ID proofs, photographs, etc. Usually, banks allow a top-up home loan to borrowers in the 18-70 years age group. The maximum top-up home loan amount depends on the outstanding home loan amount, the market value of the underlying mortgaged property, and the terms and conditions laid down by the bank,” says Adhil Shetty, CEO, Bankbazaar.com.
No restrictions on utilization
Just like a private mortgage and a gold mortgage, you’ve got the freedom to make use of the top-up residence mortgage as per your wants. You can use the mortgage to satisfy wants corresponding to an emergency monetary requirement, paying medical payments, or financing your little one’s training charges, amongst others. This is, nevertheless, not the case with residence renovation loans which can be utilized for repairs and residential renovation (construction of the home) functions solely.
Long reimbursement tenure
At instances you want an extended tenure to repay your house mortgage. Options corresponding to gold mortgage, private mortgage, mortgage in opposition to property (LAP), and so on., normally enable a most reimbursement tenure that ranges from one yr to fifteen years, relying on the lender’s phrases and situations. However, in a top-up residence mortgage, the tenure is dependent upon the house mortgage’s remaining reimbursement interval.
Overdraft facility
If you might be on the lookout for frequent liquidity, a time period mortgage could not match into your requirement. So, you might go for a top-up residence mortgage with an overdraft (OD) facility. Some banks present an OD facility in a house mortgage top-up. The rate of interest on a house mortgage top-up with OD facility is barely larger than an everyday residence mortgage however decrease than a private mortgage, and also you additionally get the good thing about steady liquidity availability for the long run. So, a top-up residence mortgage with OD facility might be helpful in that sense.
Low rate of interest
The rate of interest on the top-up residence loans is similar or barely larger than the underlying residence mortgage product. Therefore, top-up residence loans are one of many most cost-effective borrowing instruments. If you might be planning to purchase a automotive or go on a vacation journey, or want funds to your little one’s marriage ceremony, a top-up residence mortgage can show to be one of many most cost-effective borrowing devices.
Tax advantages
You can declare tax advantages on a top-up residence mortgage if the mortgage has been used just for the aim of development, renovation, extension, or restore of a residential property. The most tax deduction obtainable is as much as Rs 30,000 if the mortgage is used for a self-occupied home. If the mortgage has been used for a let-out property, there is no such thing as a restrict on the deduction. However, each of those come below the general whole tax deduction of Rs 2 lakh every year that’s obtainable on the curiosity element of residence loans.
“If the top-up loan has been used for purchasing or constructing a new property, the principal and interest component of the top-up loan will be eligible for tax deduction which is subject to the limit prescribed under Sections 80C and 24 (b). However, if the loan is used for the renovation, alteration, or repair of residential property, the deduction can only be claimed for the interest component of the loan and not the principal component,” informs Shetty.
Coming up tops
Interest charge on top-up residence loans is usually the identical or barely larger than the underlying residence mortgage product
Some banks present an overdraft facility in a top-up residence mortgage. In such a case, the rate of interest is barely larger than an everyday residence mortgage
You can declare tax advantages whether it is used just for development, renovation, extension, or restore of a residential property
Source: www.financialexpress.com”