What Are The Pros & Cons Of Taking A Top-Up Home Loan?

Home Loans are essentially commitments which last for a notably longer duration, generally for about 10 – 20 years.  Buying a house is a crucial and heavy task which is inclusive of extensive planning, fund management and home loan execution along with managing all the added cost and the cost of ensuring that the investment is in the right place and for the right property. The major problem that people face is how to secure a home with meagre and limited budget. You are required to pay a regular EMI amount, for this you need to have a decent salary and enough money to handle any emergency and uncalled for costs. To take away these worries, you may resort to Top-Up loans on Home loan which will comfortably help you meet expenses without being heavy on the pocket.

A Top-Up Loan is essentially the additional loan which is secured over and above the existing home Loan this helps meet the additional and sudden expenses that just emerged out of the blue. The existing home loan lender helps avail the loan as it is offered as an additional loan on the house. Banks usually offer a maximum of 60-70% of current market value of the property. The loan also acts as a goodwill credit to the customers who hold a decent and good credit history.

Pros & Cons of taking home loan balance transfer and top up  


home loan balance transfer and top up

  • Top-Up loan doesn’t involve voluminous documentation and paper work, since the bank already has all the details required due to handling the existing home loan for you. With all the documentation already taken care of, you are left with a swift and faster processing, which is much faster than home loan.
  • Top-up loan acts as a guard and extra financial support in times of crisis. This comes prominent especially when the home loan fails too suffice enough for the situation.
  • Any of your expenses can be catered well with top Up Loan as it is taken on the home loan. For instance, you might have home interior expenses, buying in new furniture expenses, or taking care of personal expenses. You are not required to provide a proof of expenses to the bank to procure a loan.
  • A home loan top-up is generally more or less the same rate as your home loan. This has been the major and one of the prominent reasons which has led to people turning towards top-up home loans. A regular personal loan may cost you higher than a top-up loan. Hence, you may save lot more if you opt for Top-up loan.


home loan balance transfer and top up

  • A Home Loan Top-Up is not available for anyone who doesn’t have a home loan. Only the home loan customers can avail it. If a person has had a bad credit history or suffers some default payments, he can’t avail the Top-up loanat all.
  • We tend to ignore a visible fact that the future liability of EMI is scaling new heights in the bargain. Your income is still the same; and yet, you have one additional portion of the amount that falls under the repayment category.
  • You will be required to avail the top-Up Loan from the same lender no matter what your relationship is with the bank.

While a home loan balance transfer and top up  brings in financial stability which is imperative when we need positive and negative aspects of having it inclusive of the present home loan. You must begin with a deep dive analysis and make sure you know what is beneficial for you in the long run. Be sure if this is a great solution or it is just a temporary shift from the current crisis.

Reasons to Purchase Commercial Property in 2019

Purchasing property for the business purpose is a great idea, provided you have a clearly defined objective behind it. Investment in the property helps to build equity, make your expenditures a lot more foreseeable and help you gain tax advantages too.

Here are few important reasons to consider investing in commercial real estate:-

For a greater cash flow – Generally, the return on commercial real estate is higher as compared to the residential properties. This is particularly correct if you choose to lease or rent a multi-unit commercial property. Higher is the number of tenant, more will be the income generated. Also, the commercial properties with apt location can expect a better annual return. Since the commercial estate leases are way longer, therefore, expecting cash flow stability is obvious.

Commercial Real Estate Image

Risk involved is lower- There is a lesser chance to lose out on the rental income if you own a commercial property and lease it out to the multiple tenants. Even if you lose one tenant, there are other tenants who can support you with the income generation. The landlord-tenant relationship includes two businesses rather than the two individuals. Thus, it is more of a business-to-business client association.

You can have complete control over the property- Though you can sign a long term lease for most of the spaces to set costs, you cannot control the several other external factors. While, if you own a building and need extra income, you may even rent a significant part of it. You may lower the number of tenants in case you require more space. This flexibility is not available when you lease.  The landlords can sell off the property to the other owners who might have distinct goals.

Favorable tax treatment is possible- You can secure tax benefits too by purchasing commercial property. The interest amount and some non-mortgage expenses would be removed from your return. Thus, resulting in favorable treatment with respect to the taxes.

What Should You Do Before Investing in Property?

When you decide to invest in a property, you need to do your research to determine whether the property is a smart purchase or not. You may do so by considering the following:-

  • The vacancy rates of the current owners
  • Current financial position of the tenants
  • Preference of the tenants
  • Construction of the residential properties built in proximity

If all these basics of the property are in place then investing in commercial real estate may certainly be a right financial step.

If you wish to avail loan for purchase of commercial property, you must necessarily look only for the reliable loan service providers.

How To Choose Which Property is Right For Your Business?

For selecting the appropriate property, you must check for these factors:-

Check The Location- This should be the primary concern with respect to the purchase of commercial real estate. The location can make all the difference. Therefore, you must look for the location keeping business concerns in mind.

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Inspect The Physical condition- You must carefully inspect the physical environment of the property since there may be the presence of asbestos or lead paint, which are harmful substances.

Be Aware of the Limitations- There may be certain places where it not allowed to make any changes with the property. So, it is important to be familiar regarding the zoning laws of that area.

Look for the flexibility of The Property- It would be better to look for the property which has the scope for further expansion in future, for the commercial reasons.

There are various ways by which the business can benefit from owning commercial property such as:-

  • Purchasing a property is an investment as it’s value enhance with time.
  • It can be utilized for the advertising purposes such as selling billboard or ad space.
  • It can also be used to provide services to the tenants such as parking space, for maintenance services etc.

What Can I Use Loan Against Property For?

Are you in need of money to finance your business or fund your child’s education abroad? While there may be several convenient ways to meet these expenses, one of the best options is to go for loan. You could either choose to opt for personal loan or another lucrative choice could be to take a loan against your property.

 Loan Against Property (LAP)

It can be defined as a loan disbursed against the mortgage of property. It is granted on a definite percentage of the market value of property which may be around 40% to 60%. This type of loan typically belongs to the category of secured loan in which the borrower provides assurance with the property as a security element.

The chances of getting higher loan amount are greater with the respect to such loans since these are secured. Nearly about 70% of the property value can be granted as the loan amount. The loan against property lowest interest rate might range from 12% to 15% and the loan tenure can be up to 15 years.

Loan Against Property

One can avail loan against commercial or residential property. You can take a loan against your self-occupied or rented residential property which might be a flat or merely a piece of land. There is also a possibility of deriving loan against school property.

Uses of Loan against Property:-

It can be used for the purpose of business expansion, financing the expensive medical treatments, for your vacations, higher studies in some foreign country etc.

Eligibility Criteria For Loan Against Property

The criteria to be eligible for such loans differ from bank to bank. However, there are some common factors such as:-

  • Your earnings, reserves, debt obligations
  • The property used as a guarantee
  • Your reimbursement track record for other loans etc.

How Does Loan Against Property Differ From Personal Loan?

If you have the option of choosing from one of these loans, you need to analyse both the loan types carefully on the basis of different factors before selecting the right one for you.

Loan Against Property Differ From Personal Loan Image


  • The Loan Amount- As mentioned above, loan against property is a secured loan. While a personal loan is an unsecured loan. Therefore, the risk involved is higher and the loan amount is lower. Also, the amount is decided on the basis of the income and the capacity to repay.
  • The Rate of Interest– The interest rate charged on the loan against property is lesser as compared to the personal loan; since there is lower risk of default. While the risk involved with the personal loan is higher.
  • Tenure of Loan– In the case of Loan Against Property, you may not only gain a higher amount of loan but also longer tenure. While in a personal loan, the tenure may be up to 5 years.
  • Processing of Loan– The loan processing for loan against property is a time taking procedure due to the internal and legal checks, proper evaluation of the property. The banks need to carefully examine the property which the borrower pledges to secure the loan. However, the personal loan processing is faster and the loans are disbursed as soon as it gets approval of the lender.
  • Credit Score– You can get a high credit score on a personal loan since it has a high interest rate. With loan against property, you may get a lower credit score and lender gets the benefit of the collateral. But, if the tenure is slightly longer, you can get a better credit core too. Constant Repayment is an ideal way to avail good credit scores.


Deciding which one out of the two is better depends on the financial emergency or the need. For the urgent and crucial requirement, personal loan is better. Since, it can be disbursed within few days of the application. Though, for a high loan amount with low interest rate, loan against property would be an appropriate choice.

Hurdles in Availing Home Loan Balance Transfer

Splurging home loan to the homeowners has turned out to be one of the major sources of business. The attention for all prospects is offered at an extremely lucrative interest rate along with plenty of add-ons like life insurance, motor insurance, etc. This is called divesting portfolio and in today’s environment businesses do a lot of things to stay ahead and in order, also to leverage sources of income. Bank Loan Transfers have been initiated in the market by all major banks that hold the power to borrow Home Loans to switch banks. This is a lucrative aspect that can be leveraged by the borrower as it may offer him or her a chance to save some money and be a beneficiary in the process for several benefits offered as add-on services by the new bank.

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To avail home loan balance transfer and top up, you will be asked to fill out an application form along with the proof of necessary calculations. This is processed by the new bank or some financial institution that will ultimately lead to diminished monthly repayment amounts and better quality of service.

Though the process appears simple superficially, intricately it holds a lot of things, which act as hurdles in home Loan balance Transfer and top up. Here are some of the common hurdles faced by people during the process:

  • Highly time-consuming and complicated: The bank almost always takes a very cautious approach and will provide you tons of application forms to fill accompanied with an extensive and exhaustive list of documents that require furnishing. After this phase comes the major difficult part where scrutiny happens post which the process gets all the more complicated. Hence it is always suggested that before you decide to go on-board with a bank for a loan transfer, understand the pros and cons of indulging with a bank.
  • A one-sided risk for the bank or financial institution: The bank may at times reject your loan application as no real advantage is going to be leveraged by the bank. The person might be presented with a better rate of interest, but the transfer of ownership doesn’t happen to the bank, this seems inconsequential to the bank.
  • Levying a Signing fees: Along with the challenging paperwork, the banks might also charge you a fresh processing fee that varies from banks to banks. Before signing on and agreeing to any term, ensure that the savings that you hold support that fee well which will be incurred. If the savings are not considered after switching it makes absolutely no sense going through this hard work again and again.
  • Previous banking institutions or financial institution may cause troubles: Rarely does it happen, but it may happen that the bank which is going to lose one of its customers would try to create some hurdles and try and delay your departure. It is mandatory for you to obtain a no objection certificate from the previous bank, hence it can pose as a trouble.

Home Loan Balance Transfer

Home loan balance transfer and top up requires a clear understanding between bank and borrower. The co-borrower must also approve of the switch in bank loan. Co-borrower might be staying in some other country or city in that case he/she won’t be attending the formalities that require presence of both the parties. Since, the new lender will consider you as their new joined customer you will have to ensure you follow all the related procedures and fill all the forms again. The task may seem tedious but be sure to follow the rules and righteously fill forms.

About Lease Rental Discounting – It’s Features and Benefits

Lease Rental Discounting loan (LRD) is a type of loan in which you can avail loans on the basis of future rental income, value of the property and discounted value of rentals. It is granted against the rental receipts from tenant.

It helps the owners to utilize their property in a much more effective way. One can take one loan against the capital value of the property.  The other loan is secured by the cash flow that the questionable property might produce. Therefore, opting for such loans provide much required liquidity.

Loan Against Property Image


For granting such loans, property is not mortgaged with the bank which makes it a better option as compared to the loan against property. If you are earning rent out of a commercial property which is occupied by the tenants, certainly the tenants would have agreed upon a lease agreement for few years. The bank evaluates the total rent amount which you derive from the tenant within the course of lease term. The rate for this type of loan differs from one bank to another bank. The variation in the interest rate may depend on the loan amount, type of property and the rental revenues.

The pre-payment of the loan can be done at any given time after six months from the date of final disbursement of the loan.  The Foreclosure charges will be charged as per the applicability.

Address and ID proof; Proof of Business such as registration proof, lease agreement, latest rent receipts, one year bank statement, balance sheet; Company proof are some of the essential documents required to apply for LRD loan. However, the requirement of the documents too is not similar for all the banks.

Other Requirements For Availing Such Loan

The LRD loan is as crucial as the certainty of future cash flow. Therefore, it is the duty of the banks to make sure that the Corporate tenant is financially able to meet the expectations of the bank. The banks can easily determine the possibility of future payments since they are publically traded entities, therefore availing important information about them is not difficult. On the basis of the analysis, banks choose to discount lease rentals to established corporations with good credit rating only. So, it is mandatory for the corporations to have decent credit rating.

Lease Agreement

Banks abstain from making any short term lease rental discounting loan. It also ensures the steadiness of the monthly payments for which the tenants must sign the agreement which they need to adhere to. In these agreements the mention of lock in period is mandatory. It signifies the period in which the tenant is refrained from abandoning the property. As a matter of fact, Banks avail the funds for this specific period only.

These are generally used by:-

  • The Developers- It is widely used by the Developers of industrial complexes. This is because the builders can recover the entire money they invested in the project. Thus, it saves them from undergoing any financial loss, which is a major concern for the Developers.
  • Real Estate Investment Trusts- As compared to the regular residential rentals, the rentals that can be derived from the commercial buildings such as shopping complexes are way higher. Therefore, it is obvious that the Real Estate Investment Trusts have a preference for such properties. After obtaining the property and discounting the lease rentals, the profits can be used for investment in other properties.
  • Investors with High Net worth- It is nearly impossible for a common man to purchase the properties with lease rental agreements. They may not even have the capability to look for corporate tenants and get the loan term lease with fixed periods signed. Whereas the individuals with high net worth can certainly go for it, to utilize for investment.


If you wish to apply for such loans, seeking the valuable support and guidance of the Loan Service Provider or professional related with any aspect of loan dealing would we prudent.