Wednesday, 20 October 2010

Top Up Loans are Useful For Emergency

A Top up loan is a loan taken from the same financial institution where you have already got a loan. Yes it is an extra loan that the lender allowed for an existing borrower. The lender will give an extra loan that tops up an existing loan to a higher level. Most of the time it is sanctioned over the mortgage loan, such as housing loan etc.  You can take a top up loan to satisfy any financial need such as improving your business, paying off your mortgage, purchasing a car etc. etc.

The top up loan is allowed on behalf of your existing loan and the property which is mortgaged is considered as collateral security. So the loan over the property will be more and you have to pay more for repaying the existing loan and top up loan. The eligibility of getting a top up loan is varying from one financial institution to another. It is according to the time period of loan you have taken, the installments you have been paid off and the punctuality of your payments etc.

You must be aware that the top up loan increases your liability and the property you have already pledged will be more risk. But for emergency situation it is useful that any other loan. Because it is easy to get, so that you already have a loan account with them and also have a collateral security is there, so the documents needed and paper work required for the loan will be very less. The interest rate also will be less than any other unsecured loan.

My opinion is that only in emergency condition go for a loan and if you already have a secured loan ask for a Top up loan.

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