A best up loan fundamentally makes it possible for you to avail a loan amount on best of your dwelling loan. The usual loan tenure is about ten years and is sometimes offered only soon after a handful of years into the dwelling loan disbursal, as this provides a fair notion about your repayment track record, which implies no defaults down the line and this also increases your loan eligibility. Vinita Mistry took a dwelling loan from her friendly neighbourhood bank two years ago. She bought a cute cozy apartment in a block of 60 apartments in a community enclave, which housed 300 apartments in all. At that time she did not have a four wheeler and rode a trendy power bike to operate, which was consistently parked below the stairway that went up to her 5th floor apartment. She ultimately moved office and upgraded to a beautiful seeking small automobile. Then she had a challenge! Parking Space!!. She figured she required to acquire that in addition apart from her apartment price. She wished to take a loan to cover the price of acquiring a parking slot. How can she go about this? Are you stumped like Vinita wanting significantly more amenities or are you seeking for some urgent funds, with no pricey interest rates attached to it? Well, a best up loan on your existing dwelling loan could just be the answer. Let us know the varied nuances of a best up loan prior to you make a decision to shortlist this as an choice. How it works A best up loan fundamentally makes it possible for you to avail a loan amount on best of your dwelling loan. The usual loan tenure is about ten years and is sometimes offered only soon after a handful of years into the dwelling loan disbursal, as this provides a fair notion about your repayment track record, which implies no defaults down the line and this also increases your loan eligibility. The logic behind a best up loan is the truth that you have already started repaying your loan, hence your outstanding loan amount with the bank has already begun decreasing with every single payment. A best up just enables you to utilize that margin towards acquiring a loan that you may well urgently require to meet some of your requires. Utilizing a best up loan Best up loans are a boon to individuals who are in urgent require of funds. It is almost like a personal loan, except that it comes with improved interest rates even though not as superb as dwelling loan rates but are based on the prevailing rack rates. You can utilize this loan for any purpose. A best loan on your existing dwelling loan is an ideal selection to pay for your parking space or to fund your son's higher education for instance. Eligibility You can take a best up only when you have a dwelling loan to best up on. The conditions for best up loans differ from bank to bank. You can strategy the very same bank in which you took your dwelling loan but if your bank does not give you the choice, as some reserve the perfect to offer a best up, then you could shift the dwelling loan to a bank that is willing to give you a superb deal on the best up loan. Preserve in thoughts that you require to have an impeccable repayment track record. The outstanding loan amount pending with the bank, the market value of the property and your ability to repay a best up, are all taken into account to figure out how a lot best up the bank provides you. In truth the upper limit on the loan amount is defined based on these three elements. It is consistently ensured that the outstanding loan amount you owe the bank plus the best up loan does not raise beyond about 70% of the market value of the property. Also, every single bank will have its personal upper limit and the loan amount will be restricted accordingly. Tax rewards Tax rewards are dependent on the purpose for which the loan is utilized. For Vinita, the loan is for parking space, which is part of property acquisition. Hence, she would be eligible for a tax rebate on both the principal and tax repaid towards the best up loan capped at Rs. 1 L and Rs. 1.5 L respectively, which is inclusive of the rebate she would avail from her existing dwelling loan. A sample calculation for Vinita's best up loan Let us assume Vinita has taken a loan of Rs.30 L at a 12% interest rate for a period of 20 years and as specified is now in her third year into the loan. Let us make an additional assumption that from the time she purchased the property, the value has risen by Rs. 20 L, which pegs the existing market value of the property at Rs.50 L. 70% of Rs. 50 L = Rs. 35 L (70% of the value is taken as the margin beyond which the loan will not exceed) Next, the outstanding loan amount is deducted from the above figure: 3 years into the loan she would have repaid a principal amount of Rs.1.31 L Remaining Principal amount to be repaid - Rs. 28.7 L Rs. 35 L ( 70% of market value) - Rs. 28.7 L (principal but to be repaid) = Rs. 6.3 L Hence the maximum best up loan she will be eligible for based on this example, is Rs. 6.3 L. Having said that to avail a best up loan, factors like your repayment capacity based on your revenue and commitment towards any other loans other than your dwelling loan and so on., will be factored in prior to the bank decides on the precise best up loan amount they can give you.
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