Top up loan vs Home Improvement Loan - which one is best

Just like all other things in life, your home also requires regular checkups, upgrades, and care. Every homeowner wish to make some improvements to their home, such as building a new room, renovating a room, or upgrade the interior of the house.

The interior of your house reflects your personality, and to beautify your home, you need to work on our financial gains because such endeavours come with a price tag. Thus a Home improvement Loan comes to reduce your financial burden.

With time, many Housing Finance companies such as Shubham Housing Finance, Adhaar Housing Finance, Art Housing finance, and NBFCs have come up with consumer-friendly loan options. 

These loans have a low-interest rate when compared to other loans:-

Top-Up Loan

A top-up loan is a loan given when there is an immediate financial need. It is recommended that if you already have an existing loan, then you can opt for a top-up loan. One can avail of this facility from housing finance sectors or NBFCs.

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

Top-up Loan vs. Home Improvement Loan

1. Purpose of the borrowed amount: A home improvement loan is a good option of borrowing money for renovation, up-gradation, external and internal repairing, waterproofing, etc.Whereas, a top-up loan can fulfil a host of requirements such as marriage expenses, business expansion, and repay any other debt.

2. Lesser interest rate: One of the most significant advantages of securing a home improvement loan is a lower and fixed rate of interest. A top-up loan compared to a personal loan is comparatively lower for top-up loans.

3. Quick approval: Since you already have an existing loan from the same bank, you can expect a faster approval compared to Home Improvement Loan.

4. Tax Benefit: You can claim a tax deduction on a home improvement loan as well as a top-up loan. All you need to avail the deduction under section 24.

5. Loan tenure: The tenure of the top-up loan cannot exceed the tenure of the primary loan. Thus, you have the option of choosing a tenure equivalent to your existing one or a shorter one. But for a home improvement loan, you can have a longer tenure.

6. No collateral needed: Since a top-up loan and a home improvement loan is an unsecured form of a loan, you do not require to pledge any security or collateral against the loan.

7. Lesser paperwork: There are few housing finance companies such as Shubham Housing, Adhaar, Art housing requires less and minimal paperwork compared to other financial sectors. For a top-up loan, you need comparatively few documents as you are already an existing customer.

Almost, everything is similar while comparing a home improvement loan and a top-up loan. But if you foresee any future financial necessity other than home renovation, a home improvement loan is a better option to opt for. It is recommended that before you choose one, give yourself the ratings based on the interest rate.

Also, if you are looking for a hassle-free and quick approval of loans, we are here to help you. Plan your loan well to invest more and earn more.