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Should you get a top-up loan or a new loan?

Additional loan vs new loan

suresh. M is a 40-year-old computer scientist residing in Bangalore. He has a mortgage of up to 60 Lakhs with HDFC bank for a term of 25 years. To date, Suresh has created 48 flawless EMIs. The situation is that Suresh wants to renovate his house which will cost him around four lakhs according to his estimate. Then, Suresh is unable to pay that amount in his savings account and decides to take a personal loan of three lakhs from HDFC only because the bank has a good relationship with the bank.

SummaryAdd-on Loan vs New LoanThe benefits include:Let's see this more clearly using the math and compare the two alternatives.The benefits of an add-on loan

If Suresh contacts HDFC for a denmark billigste lån , they recommend that he take out an additional home loan instead of a new home loan.

A top-up loan can be described as a service offered by the bank to existing customers with a loan account. This option allows borrowers to receive additional funds on top of their existing loans. However, the top-up loan is only available for home loan or personal loans.

Benefits include:

  • Instant financing
  • There is no need to go through the steps.
  • Little interest.
  • You have a reliable backup because you have a relationship with the lender.

Let's see this-more-clearly-using-calculus-and-compare-the-two-alternatives.

  • The interest rate on an existing home loan is 8.5%.
  • The interest rate of the new personal loan will be 10.35%.
  • EMI Home Loan – 56,366 per month
  • The EMI for the personal loan is 10,210
  • If they decide to get the top-up loan instead of an individual loan, they can get it approved for 7.5% as home loan rates have been reduced.
  • Therefore, it is inevitable that Suresh could save money if he takes advantage of an additional home loan.

Similar to personal top-ups for loans. If you are already repaying an individual loan and you are in the mood to borrow another one. In this situation, you have two options:

  1. take out a personal loan with a top-up or
  2. take out a new personal loan.

A supplemental personal loan is the same as an up-to-date home loan. It is made available to customers by an existing lender. What differentiates add-on loans from new loans is that new and established lenders can offer new personal loans, while add-on loans can be made available to existing lenders.

If a customer has already paid EMI and is paying EMI, it is best to choose the best option keeping in mind the obligations to consider and after calculating and comparing each of the choices.

But, when making a choice, you have to think about your current situation while thinking about the future. Which EMIs impact your financial situation, total cost of loans, processing fees, etc.

The advantages of an additional loan

  • Simplified documentation process
  • Quick and easy approval
  • Low interest rate
  • Lower EMI
  • A hassle-free procedure.
  • Possibility of longer durations

Important Note: Like other loans, a top-up is also subject to processing fees as well as check redemption fees, and additional fees apply. Therefore, it is crucial to decide after doing the right calculation and doing your study. A top-up loan also comes with tax benefits under Section 80C and Section 24 of the Income Tax Act. Yet it is essential to use the money borrowed for reconstruction/renovation or education purposes to benefit from it. You may need to show proof to qualify for these tax benefits.