Home Loan Balance Transfer or Top-up Loan!!!! What is more beneficial??? It is a big and also a difficult question for everyone.
We are trying to help to find the answer for this question. To find the best suitable answer, First we need to understand the exact meaning of “Home Loan Balance Transfer” and “ Top-up Loan”
Home Loan Balance Transfer
As we all know, Home loan is one’s biggest financial decision. It took maximum portion of the income. Everyone wants to pay less interest rate on their loans and balance transfer give us that option.
Home loan balance transfer simply means that transferring balance principal loan amount to another bank . The main reason one opt this transfer because the other bank is charging lower interest rate. In Home loan balance transfer original lender bank gets the unpaid amount and now you have to pay EMIs at the new rate to the bank in which home loan has transferred.
There are some important points needs to consider before apply for a home loan balance transfer i.e
Transfer process:
First of all, borrower has to submit a letter for transfering. Its all depend on the lender whether letter got accepted or not. If lender accept the letter, they will issue Non-objection certificate.
Transfer charges:
Some lender’s charge prepayment penalty. This can vary from 2%-5% on outstanding loan amount.
Termed as new loan:
This is not just a simple transfer. Borrower need to go through all the procedures involved for a home loan. The procedure is not a cup of coffee.
Top-up Loan
As the name suggest, Top-up of loan means existing borrower have option to make addition in its existing plan by agreeing terms and conditions of the bank. Borrower can avail this facility if existing loan EMIs paid regularly.
Top up of loan is useful when borrower need more finance and do not want to go with the whole long procedure for applying a fresh loan. Here we have some points regarding Top-up Loans:
Feasible:
The one of the feature of Top-up Loan is its feasibility. The borrower can use this feature for any kind of loan. This feature give borrower an option to use existing home loan for any other purpose after topping up.
Lower interest rate:
The rate of interest is comparatively low as compared to existing interest rate paid by borrower for home loan.
Tenure and easy approval:
Top-up loans are generally approve for longer period say 20-30 years. As lender already know the borrower, loan get approved easily. Also, documentation is not required.
Tax benefits:
Borrower can avail tax benefits if using the loan amount for home extension, renovation, or for educational purpose for yourself or child.
After considering all the points above, Top-up loan is more beneficial. As it give borrower to use loan amount for different purposes with low interest rate. Apart from this, the borrower does not have to go through the long paperwork and tax benefits are also obtained.
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