Just like other buyers, current home loan borrowers also may well have to avail more credit facilities to finance massive ticket spends like home improvement or renovation, auto buy, children’s greater education, and so on, or to tackle monetary exigencies. Sensing this will need, home loan lenders began providing prime-up home loans to the current borrowers without the need of any finish-usage restrictions.
Here are 5 main positive aspects of availing a prime up home loan vis a vis availing option solutions like a individual loan, loan against credit card, and auto loan, amongst other individuals:
Lower interest price
The interest rates of individual loans generally range about 10%-24% p.a. based on the borrowers’ credit profile and other criteria. The interest price of loan against credit card is usually a notch higher than these of personal loans available to a borrower from the identical lender. However, in case of prime-up home loans, the interest price is usually the identical or a notch higher than the interest price of the underlying home loan. This tends to make prime-up home loans one of the least expensive credit solutions for the current home loan borrowers servicing home loans at reduced interest prices.
No restriction on finish usage of funds
Although top-up home loans can only be availed by the current home loan borrowers, they do not come with any finish usage restrictions except for speculative purposes. The absence of finish usage restriction tends to make prime-up home loans a excellent option to personal loans or loan against credit cards for the current home loan borrowers.
Longer repayment tenure
The tenure of prime-up home loans primarily depends upon the residual tenure of underlying home loans, with some lenders additional capping the prime up-up home loan tenure at 15 years. The repayment tenures of option credit options like loan against credit card and individual loan generally go up to 5 years, with some lenders offering personal loans with longer tenures of up to 7 years. Given that longer tenure leads to reduced EMIs, opting for a prime-up home loan can assist in minimizing the EMI burden. Similarly, current home loan borrowers in search of longer loan tenures to finance their car buy can also think about availing prime-up home loans.
Higher loan quantity
In case of prime-up home loans, the eligible loan amount sanctioned by lenders is ordinarily the distinction in between the initially sanctioned home loan quantity and the outstanding loan quantity. As far as individual loan is concerned, the loan quantity can range between Rs 50,000 and Rs 40 lakh based upon the borrower’s revenue and repayment capacity. The loan quantity in case of a loan against credit cards is usually a proportion of the credit card holder’s credit limit. However, some card issuers tend to offer loans against credit card more than and above the credit card holder’s credit limit.
Hence, the possibilities of having a greater loan quantity are much higher in case of prime-up home loans, specially for these who have currently repaid a substantial proportion of the original home loan amount and have displayed disciplined repayment history.
Quick processing and documentation
Lenders ordinarily take 1-2 weeks to disburse prime-up home loans. Loan against credit cards are ordinarily disbursed instantly or inside a couple of hours of submitting the loan application whereas individual loans are disbursed inside 2-7 days. Some lenders also claim to present pre-authorized individual loans with more rapidly disbursals. Hence, individual loans or loan against credit card would suit these in search of faster loan disbursals.
However, some lenders have began providing pre-authorized immediate prime-up home loans wherein they claim to disburse the loan quantity inside the same day of making the loan application. Thus, these getting current home loans with lenders providing immediate prime-up home loans can think about prime-up home loans to avail fast finance.
(By Ratan Chaudhary, Head of Home Loans, Paisabazaar.com)