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
- 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.
- 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.
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.
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 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.