The Most Authentic Guide on Personal Finance and Investments


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Home Loan Top Up is a Savior in an Emergency

Many of you must have bought a house.

Many of you would have taken home loan to part finance this purchase.

Many of you would have, by now, repaid a part of the loan.

If so, then you have a great option at hand to 
a. raise 'quick' money 
b. at 'low' interest rates.

When an emergency strikes and you don’t have sufficient money in your bank, the first reaction is to borrow from friends and relatives. Alternatively, if you don’t want to bother them, you take recourse to — readily available — personal loans and / or credit cards.

Don’t:

Instead, go for the Top Up Loan against your Home Loan Account.

In this case too, you will receive the desired money pretty fast. 

But with a big (big) advantage:

It will be much (much) cheaper.

While personal loans will dent your pocket by 15-20% p.a. as interest cost, credit cards will burn a big hole of around 30-40% p.a.  Top up on home loans would cost you only around 11-12% p.a.

Many Advantages of a Top-up loan
- Being secured, the interest rate will definitely be lower than other alternatives
- Since mortgage is already in place, processing will be faster and simpler
- You will get longer time to repay (matching with your balance home loan tenure)
- Total eligible amount would also be, most probably, much higher
- Processing fees would be lower

By the way:

Cheaper interest rates and longer loan tenure would result is lower EMI payout every month. Hence, top up on home loans are a lot more convenient to repay than other loans. They won’t stress your monthly budget too much.

In fact, this option is not only for the emergencies. You can take home loan top up to finance your other important needs such as home renovation (which may also give you additional tax benefit), marriage expenses, children’s education, holiday expenses etc. 

[Beware: These are planned expenses and should ideally be financed in a planned manner (if possible from own funds). Don’t depend on last minute loan arrangement to meet such critical expenses.]

Hence, you must check out home loan top up option, before you fall for the charms of your banker and avail the more expensive personal loans.

In fact, if for some reason you are unable to avail a top up loan, you must explore other options of secured borrowing. This could be loan against insurance policy, gold, shares, mutual funds, etc.

Personal loans and credit cards should be way down on your list of available options. They should be taken only as a measure of last resort, when all other alternatives have failed to materialize.

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