Step-Up vs Top-Up Home Loans: The home loan market in India is expanding rapidly. This loan given to the housing sector provides a variety of options to meet all the needs of potential homeowners. Among these available options, step up home loans and top up home loans are also very popular among customers. If you are considering taking a home loan and are confused about which of the two to choose, then here is the difference between the two options, step up home loan and top up home loan. By understanding the difference between these two popular options, you can choose the right home loan option.
Step-up and top-up home loans serve different financial purposes. Step-up home loans are suitable for young professionals who have a low initial income but expect significant growth in their careers. In contrast, top-up home loans are beneficial for those who need separate funds to meet their personal or professional financial needs without the hassle of applying for a new loan. It is important for customers to understand the difference between these two home loan options.
This is a home loan option in which the future income of the customer is also considered as a parameter for determining the loan amount. This loan is called step up home loan. That is, understand it like this that this is a home loan in which the lending bank or financial institution increases your loan eligibility or loan amount by considering your future salary.
For example, in normal circumstances, if the monthly income of a person applying to a bank for a loan is Rs 25,000, then it means that your eligibility for a 20-year loan is in the range of Rs 13-14 lakh. But, when you take a step up loan, your eligibility will increase by 5-30 percent. The loan amount will increase according to the industry you work in and your future income. In this type of loan, the EMI i.e. the installment amount is low in the first few years, which keeps increasing gradually. It is believed that your salary increases every year, so the installment also keeps increasing every year. Although step up loan is expensive, but looking at the installment facility, it can be said that step up loan is very convenient.