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Tata Capital > Blog > Which One Should Be Taken – Home Loan Top Up or A Personal Loan?

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Which One Should Be Taken – Home Loan Top Up or A Personal Loan?

Which One Should Be Taken – Home Loan Top Up or A Personal Loan?

We all can agree on the fact that life can be unpredictable at times. One moment everything seems smooth, the other an urgent financial need may arise. It can be anything such as paying for a child’s education, wedding, travelling, vacations, medical emergencies, home renovation, business needs and much more.

In situations like these, opting for a personal loan may seem like the most viable solution. However, if you have an existing house loan, you also have the option to get a top-up loan on home loan for financial assistance.

What is a housing loan top-up?

A housing loan top-up is a supplementary loan that is offered by your lending institution. You can avail of this facility to borrow extra money over and above your current housing loan. It can safeguard you against money troubles and help you in times of financial crisis.

If you have been timely paying every home loan EMI of your original loan, you have a higher chance of getting a top-up. Lenders provide this assistance to customers with a good track record of repayment. Know that a housing loan top-up can be the most straightforward and most hassle-free option when extra finance is required.

Additional Read: A Top Up Home Loan can help with your home refurbishment needs

Let us compare home loan top up vs personal loan to understand why opting for an add-on can be beneficial.

Prolonged tenure

The housing loan top-ups have longer and flexible tenure options. Your lender can offer the remainder of the tenure on your current home loan as your top-tenure. As housing finance tenures generally extend up to 30 years, this period is greater than what you generally get on personal loans. Longer tenures also ensure lower monthly EMIs, which further leads to increased eligibility.

Quicker loan processing

The processing time for a house loan top-up is low, and checking home loan top-up eligibility is quick and easy. This is because the existing lender has an association with you beforehand. They already possess your details and required documents.

In case you apply for a personal loan, the lending institution might take slightly longer to verify your details and understand your profilecarefully. This may lead to an increased loan processing time.

Low-interest rates

A personal loan is an unsecured loan, meaning, the borrower need not pledge any collateral to avail one, and thus a slightly high-interest rate is levied on it. On the other hand, a housing loan top-up already has your house serving as security. Therefore, the top-up home loan interest rates can be lower. This is one of the primary reasons why choosing an add-on can be advantageous.

Tax benefits

You can enjoy tax benefits on your top-up loan up to a specific amount when you utilise the funds for pre-determined purposes. Tax benefits are not applicable on personal loans, which can be utilised for any end-purpose.

Additional Read: Income Tax Benefits on Home Loan

In conclusion

Are you looking for a top-up loan? Choose Tata Capital to provide you with the best housing loan top-up facility. With a highly affordable home loan top up interest rate and our industry-standard offerings will help you fund your needs conveniently.

Also, with our online top-up loan calculator tool, you can easily compute your potential EMI to repay the loan. To know more, log on to our website or give us a call today!

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