Difference Between Top-up Loan and Personal Loan

Buying a home is the best decision an individual can make. One can always opt for loans, but getting a loan which has pocket-friendly interest rate is difficult.However, there are various banking sectors that have come up, which has consumer-friendly loan options. If you are planning to buy a home, then you can choose between a personal loan or top-up loan. 

But before opting for either one, it is better to understand the difference between the two, and how can these help you? Let’s find out.

There is a little difference between the top up loan and personal loan. A top up loan is an additional inclusion to your existing home loan. To avail, top-up loan, the customer has to repay the existing home loan. The lender provides home loan top-up only if the borrower has provided collateral for the same.  A borrower can avail tax benefit on home loan top-up only, for their child’s education or home extension, renovation or improvement, etc.

However, a personal loan is a loan in which an individual to meet his/ her requirements(Cudnt understand this line, so cudnt edit). 

A personal loan is sanctioned to an individual based on his/her repayment capacity, income, net monthly salary, credit/CIBIL score, employment history, occupation, etc.  

The key features and benefits of Top-up Loan
 
No Additional Collateral: Top Up Home loans does not require any additional collateral. You need not have to provide any evidence of holding an asset for availing this loan. Your home loan agreement/paper will act as collateral.

Interest Rate: Top-up loans are available at interest rates similar to home loan rates, though it may be a few basis points higher than the original home loan rate.

Loan Tenure: Generally, the loan tenure is 10 years to 15 years. Sometimes it can go up to 20 years based on your existing home loan tenure.

Approval: Generally, it takes 2 days to get an endorsement of the loan. Most of the financial banks check your compensation history and capacity of the receiver before approving the loan.

Find out how a personal loan is different from top up Loan  

Home Loan Top-up
Home loan property acts as a collateral
Interest rates are slightly low
Higher loan tenure
Approval generally takes time
Tax benefit if used for home construction/ extension

Personal loan
No Collateral required
Interest rates are higher
lower tenure up to 7 years
faster loan approval
no tax benefits

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