Home Loan vs Top-up Loan: Benefits and Uses of Both

A home loan is a secured borrowing obtained to fulfil a dream of purchasing a property. On the other hand, a top-up loan can be acquired by anyone who requires additional funds, but only if they are already servicing a home loan. 

This additional fund can be utilised to meet various other expenses such as repayment of other debts, renovating a house, etc.

Therefore, if you are thinking of availing a housing loan in India or a top up credit, read on features and benefits before making an informed choice.

Features and benefits of home loan

  • One of the primary advantages of a home loan is that one can avail substantial loan quantum at affordable interest rates compared to other unsecured loans.
  • Ideally, this type of credit facility comes with a flexible home loan tenor of up to 30 years. Besides, borrowers can avail home loan tax benefits and save substantially on their repayment.
  • Individuals need to meet home loan eligibility criteria to avail the desired loan amount.

Features and benefits of top-up loan

  • A top-up credit enables borrowers to upgrade, improve, renovate an existing property.
  • Unlike a housing loan, a top-up credit can be utilised to meet varied expenses.
  • This loan is granted over and above the original home loan after checking the borrower’s creditworthiness, income status, etc.
  • The approval process of a top-up credit is comparatively quicker as the borrower is already repaying an existing home loan with the lender. 

Thus, home loan and top-up credit significantly complement each other and come with their own set of benefits. One must carefully study these aspects before availing a housing loan in India or a top-up credit as necessary.


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