Hyderabad:There is an exemption for principal and interest amount paid on housing loans under Section 24 and Section 80C of the Income Tax Act. A tax deduction can be availed when you utilise the top-up loan either to build or buy a home. So, when taking a top-up loan, you need to establish that the amount was used only for the said purpose with supporting documents to claim exemption.
It is long-term...
It could be a personal loan or money borrowed on gold, the duration for repayment would be anywhere between 1 and 15 years, depending on the loan conditions. While top-up loans would be slightly different from them since it is linked to the term of housing loan. For instance, if the term of the housing loan is 20 years, then the term of the top-up remains the same. Enabling you to easily repay the loan in the long run, based on bank regulations.
Overdraft
If you need money once in a while, then borrowing the whole sum amount will not serve your purpose. Instead, avail overdraft facility on the top-up loan. Some banks offer overdraft facilities on the housing loan, but the interest rate would be slightly higher than a home loan, still less than a personal loan. At the same time, it offers the advantage of taking money only when needed for a long period of time. So, a home loan with an overdraft facility is key.