What is a top-up loan? When and how can I avail it?
A top-up loan basically allows you to avail a loan on top of your home loan. Usually, the tenor for this loan is about 10 years. It is often offered only after a few years of the home loan disbursal. This helps the banks monitor your repayment track record, which can even increase your eligibility.
The logic behind a top-up loan is the fact that you have already started repaying your loan, hence your outstanding loan amount with the bank is decreasing with each payment. A top-up enables you to utilize that margin towards obtaining another loan. A top-up loan is almost like a personal loan, except that it comes with better interest rates, though not as good as home loan rates.
My best friend Nitin lives from pay cheque to pay cheque in spite of having a handsome salary, which can enable him to save a portion of his income with ease. Yet his lifestyle is such that he needs a calendar to mark his numerous get-togethers and parties through weeknights and weekends and ensure they don’t overlap! He is an impulsive shopper as well and his credit card debts and personal loans are starting to look threatening to me. Please suggest.
Arthi, Nitin’s spending patterns may not be of sound judgement but he has certainly chosen his friends well! It is very thoughtful of you to keep his best interests in mind. You could try telling him that he is not going to be young forever and may need various funds to tap into at various stages and for various needs. Narrate real life incidents that you are aware of where friends had to face hell during recession or a medical emergency perhaps. Such incidents are not uncommon. Next, get him to meet a financial counsellor, who will be able to help him lay out a goal-based savings plan, which can put things in perspective for him.
I have a few ancestral properties. One is in Kerela and another in Goa. Is there any way I can utilize them to obtain funding for a business plan I have in mind? Please advise how I need to go about this.
You could generate a lot of funds pledging your properties for a loan. To be on the safer side see if you can include one of the properties in your business plan in terms of say workplace utilization. Else, consider renting it out to other businesses. The locations you talk about are high on tourism value. See if you can rent out one of them to a resort or spa business chain and utilize the rental income as a regular source of funding for your business.
Adhil Shetty is CEO & co-founder, BankBazaar.com
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