Top Up Loans Advice

Top Up Loans Advice

Top-up Loans Advice
If you​ have a​ mortgage and are in​ of​ more money to​ help you​ pay off debts or​ finance home improvements,​ then you​ should consider getting a​ top-up loan .​
a​ top-up loan can help you​ to​ put your finances back on​ track without having to​ pay vast amounts of​ interest .​
If you​ are unsure about top-up loans and how they can help you,​ then here is​ some information to​ help with your decision.
What are top-up loans?
If you​ have a​ mortgage loan,​ then it​ is​ likely you​ can apply for a​ top-up loan .​
a​ top-up loan is​ in​ essence a​ loan given to​ you​ at​ the​ same rate as​ your mortgage .​
It is​ not a​ remortgage,​ but rather a​ ‘top-up’ of​ the​ amount you​ borrowed .​
This amount can be used for a​ variety of​ purposes,​ including debt consolidation or​ home improvements.
How much can I​ borrow?
The amount you​ can borrow varies depending on​ the​ value of​ your property and how long you​ have been paying back your mortgage .​
If you​ have been repaying your mortgage for less than one year,​ it​ is​ unlikely that you​ will be eligible for a​ top up loan .​
Usually after one year of​ repayments you​ can borrow an​ amount around 10-20% of​ your mortgage value,​ and then after two years this might go up to​ 30% .​
a​ top-up loan of​ 30% is​ often the​ highest you​ can possibly get.
You can borrow more for less
The primary advantage of​ a​ top-up loan is​ that you​ can borrow more money than you​ would be able to​ with an​ unsecured loan,​ but at​ a​ much lower cost .​
You will only be paying the​ same interest rate as​ that of​ your mortgage,​ meaning your repayments will remain low .​
If you​ need to​ borrow a​ large amount of​ cash,​ then a​ top-up loan is​ one of​ the​ cheapest ways to​ do this.
No tax benefits
Although the​ interest rate is​ low like a​ mortgage,​ the​ loan is​ treated as​ a​ personal one,​ and therefore does not have the​ same tax benefits as​ a​ mortgage .​
There are no tax benefits on​ the​ interest of​ a​ top-up loan,​ so you​ cannot save money this way as​ you​ could with a​ remortgage .​
However,​ a​ top-up loan does not have the​ same costs associated with a​ remortgage,​ so it​ is​ cheaper and quicker to​ set up.
Risking your home
Although top-up loans are treated like personal loans in​ terms of​ tax,​ they are still secured using your mortgage and home,​ and so there is​ a​ chance you​ will lose your home if​ you​ do not keep up with repayments .​
Make sure you​ can keep up with the​ repayments even when times are tough,​ and only borrow what you​ really need.
Are top-up loans worthwhile?
Top-up loans are very worthwhile for homeowners who want to​ borrow a​ large amount of​ cash at​ a​ low price without having to​ remortgage .​
They are especially good for home improvements,​ as​ you​ can make back the​ cost of​ the​ loan by adding to​ your property value .​
However,​ if​ you​ are looking to​ borrow a​ smaller amount over a​ shorter time,​ then getting a​ personal loan might be cheaper and less risky.

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