Top-up loans are best for those who have existing loans and are looking for monetary support at the same time.

It can fulfil any of your personal and short term business requirements.

It’s cheaper than other commercial loans.

What are the Top-up loans?

A top-up loan, as the name recommends, is benefited to the borrower well beyond the previously existing loan. Generally, the tenure period for such an advance ranges from five to ten years. Banks offer this kind of advance to borrowers who have an existing home loan or personal loan. Well, these loans are easy to avail but banks have some criteria to approve this kind of loan. In case your bank doesn’t provide top-up loans then you can opt for a balance transfer with a lender who offers a top-up loan as well. To get approved for any kind of top-up loans you have to be regular with your existing loan payments and you should be done with a particular number of EMIs*.

Features of Top-up loans

  • A top-up loan can opt only if you have an existing home loan or personal loan facility from the same lender.
  • If it’s a home loan top up the tenure can range from five to ten years whereas if it’s a personal loan top up then the tenure can go up to two years.
  • Your outstanding home loan/personal loan will determine the loan amount approved on your top-up loan. 
  • Your repayment history for the existing loan and your CIBIL plays a great role in your top-up loan approval.
  • Top-up loans are generally available at the same interest rate at which you have your ongoing loan.

Well, home loan tops are generally provided only for home construction, renovation, purchase, etc., while you can consider availing a personal loan top-up for several requirements which include,

  • When you require urgent funds to meet your personal requirements.
  • When you are looking for a short term funding option for your business requirements. 
  • You want to avail a loan with minimal documentation.
  • To fund your marriage expenses, vacation, etc.
  • When you are looking for long tenure funds at low-interest rates.

Read on to know the various aspects of a top-up loan and its benefits.

  • It can be availed for a variety of personal or professional needs.
  • Requires minimal documentation and quick loan processing as you already have an ongoing relationship with the lender they have your details in prior. 
  • Lower rate of interest compared to other commercial loans.
  • Longer loan tenure 
  • Simple repayment option.

Let’s take an example to understand it better:

Suppose you have an ongoing personal loan that you have taken 2 years ago, for a loan amount of 5 lakhs for a tenure period of 5 years. Suddenly a medical emergency arises and you need urgent funds. You don’t have much savings and the option left to you is borrowing. Now, as this is an emergency, you don’t have time to apply for a loan, then complete a long documentation process and wait for the approval and disbursal. Here, you want something which provides you with immediate funding without any delay.

Availing a top-up loan is the best option in such a situation. No need to apply and then wait long for the approval. You just need to contact your lender, apply for a top-up loan and that’s it. If you fit into their eligibility criteria funds will be allotted to you within an hour and then you can easily fulfil your requirements.