The book building process begins with an opening period during which investment banks invite qualified institutional buyers (QIBs) to submit bids for the number of shares they want and at what price. Depending on the market, this opening period can last for a few days or weeks. 

Once the opening period ends, the underwriters review all bids to determine an optimal price range for the shares. They then allocate them according to demand from QIBs and other institutional investors, such as venture capital funds and mutual funds. The remaining allotment is usually made available to retail investors. 

Once this process is complete, the issuer sets their IPO’s final price based on the bids received during book-building and any pricing discounts or premiums they may offer to attract buyers or sellers, respectively. After that, trading can begin on the exchanges where it was listed. 

The benefits of book-building in the Asian markets

Book-building is a popular method for IPOs in the Asian markets due to its simplicity and efficiency. It helps issuers size up their offer accurately, ensuring that it is large enough to meet investor demand but not too big to cause an oversupply. 

Book-building also provides significant liquidity for investors who want to enter or exit positions at any point during the opening period. This liquidity helps create a more efficient market and ensures that prices are determined based on fair value rather than speculation or guesswork. 

Book-building is an essential tool used by Asian issuers when launching IPOs. Its ability to match supply with demand while providing investors with trading flexibility makes it a popular choice among institutional and retail investors. 

Book-building helps issuers raise capital more quickly and efficiently when compared to other methods of issuing securities. This is especially true for smaller IPOs where the issuer may need access to various investors or distributors. Book-building provides an efficient and cost-effective way for these companies to reach many potential buyers. 

Book building is an essential tool used by Asian issuers in launching IPOs. It helps them size their offer accurately based on market demand while providing investors with liquidity and flexibility throughout the opening period, making it an efficient and popular choice among institutional and retail investors in the Asian markets. 

What are the drawbacks of using book-building in the Asian markets?

Despite the many benefits of book-building in the Asian markets, there are also some potential drawbacks. The most significant drawback is that book building can be used to manipulate prices, which can occur if a small group of investors submits bids at abnormally high prices during the opening period, creating an artificially inflated value for the shares. This could lead to an undeserved capital gain for those particular investors when trading begins on the exchanges. 

Book-building is also more time-consuming than other methods of issuing securities and requires substantial resources from issuers and investment banks. Additionally, it may not be suitable for smaller IPOs where the issuer needs to access a more significant number of investors or distributors. 

Book-building can be subject to regulatory scrutiny in the Asian markets. To avoid potential legal issues, issuers must ensure that their underwriters and other intermediaries comply with all applicable laws and regulations. 

The bottom line

Book-building is an essential tool used by Asian issuers in launching IPOs. It helps them size their offer accurately based on market demand while providing investors with liquidity and flexibility throughout the opening period. This makes it an efficient and popular choice among institutional and retail investors in the Asian markets. By using book-building, issuers can raise capital to fund their projects more quickly and efficiently. 

Additionally, it helps ensure that prices are based on fair market value rather than speculation or guesswork. Ultimately, book-building is an invaluable tool in the Asian markets for companies of all sizes looking to launch IPOs. 

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What is the Guaranteed Return Insurance Plan?

The Guaranteed Return Policy is a savings plan that allows you to save up all you need to meet the major milestones in your life and turn your dreams into reality. With a guaranteed return insurance plan, you can benefit from life insurance plans and an element of savings to meet your life goals.

What are the Advantages of a Guaranteed Return Insurance Plan?

You can get several benefits from life insurance with guaranteed returns if you have invested in the right manner. Here are some of the advantages mentioned in detail. 

Maturity Advantage

Due to risks and other factors, most people find it difficult to prepare for long-term financial planning. The guaranteed return insurance policies allow you to save more money by offering maturity benefits with lump-sum returns. Such an insurance savings plan includes methods for dealing with any urgent financial needs that necessitate a large budget.

Second Income source

The primary advantage of this plan is that it allows a policyholder to cover expenses through a regular income option. It provides methods for easily planning retirement life, which will aid in leading a trouble-free life. As a result, it is also known as a guaranteed pension plan.

Unforeseen death benefit

In the unfortunate event that the insured dies during the premium-paying term, the nominee of the policy receives the basic sum assured amount, as well as any reversionary bonuses and terminal bonuses. Furthermore, the payouts are carried forward for the next 15 years or as specified in the policy. If the insured dies after the premium-paying term or during the payout period, the nominee receives the sum assured amount in addition to the other benefits.

Flexible Payout Options

When policyholders require large sums of money in an emergency, a guaranteed income plan provides flexible payout options. It allows a person to receive the money as a lump sum or as a monthly income.

Income Tax Advantages

Every year, a tax deduction under Section 80(C) is available, as is a tax exemption under Section 10(10D) on the maturity proceeds, subject to the terms and conditions.

Who is Eligible for the Life Guaranteed Return Insurance Plan?

Those who are looking for a steady income or a regular income should check an online insurance plan and buy the one which suits their requirement. For example, the Guaranteed Return Insurance Plan or GRIP of Tata AIA Life Insurance is a plan which imparts several benefits. Similarly, there are other plans of different insurance service providers which can be considered too. 

Individuals between the ages of 18 and 60 can purchase them to meet their specific needs. Not only that, but they can concentrate more on their retirement plan with them to gain more benefits. Investors should read the terms and conditions before purchasing guaranteed return insurance policies. 

Conclusion

The guaranteed return insurance plan provides the best possible return Insurance plan that ensures the benefits are safely reaped by the policyholder. Moreover, a guaranteed return insurance plan makes sure that the family of the policyholder is also taken care of in account of any unforeseen situation that might arise. 

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Many times, you try and time the markets by redeeming your full investments in hopes of re-invest the same at lower levels. This is one of the classic examples of timing the market. Also, at times, you may tend to treat your mutual fund investment like stocks. In the case of stock, it can be overpriced or underpriced, and hence, there may be a case to exit your investment in stocks at a high value. However, in the case of a mutual fund, as it contains a basket of various investment products and the price of every unit reflects the product’s value in the scheme’s basket, the question of undervaluation and overvaluation does not come up. 

Thus, knowing when to exit your mutual fund investment is very important as this has the potential to make or break your goal of wealth building. Exiting your lump sum mutual fund investment must not be based on market movements, except in the scenario of financial exigencies. You must do it after considerable planning. You may use an online lump sum calculator to determine how long you may take based on the present market level to attain your goal before you decide to redeem it way before your deadline for your financial goal. Read on to understand the different occasions and ways you can redeem your lump sum investment in mutual funds. 

Acquired or nearing your financial goal 

When you are nearer to your crucial financial goal than expected, you must focus on preserving your corpus. When nearing your financial goal, your potential to take risks lowers. Staying invested in equity mutual funds once you have reached your financial goal is counterproductive at times. In case you have achieved your goal earlier, you can exit the scheme and shift all the corpus to a bank fixed deposit or liquid fund to preserve your accumulated fund. Switching to a less risky instrument can prevent your amassed fund from market volatility. 

Want a regular flow of income from mutual funds 

In case you are looking for regular cash flow from mutual funds, do not shift this to a dividend option. Opting for SWP (systematic withdrawal plan) is more effective. It is a prudent facility that mutual funds offer. When you select the SWP plan, it permits you to liquidate your investments phase by phase. You can direct your investments in a mutual funds to your bank account. In SWP, your mutual fund value lowers by the units you withdraw. 

Shift in fundamentals

When a mutual fund witnesses fundamental changes, its risk profile even shifts. This may be owing to a change in the mutual fund manager, a change in any basic attribute of a mutual fund, or a change owing to regulatory rules. If such changes happen and you are uncomfortable with their impact on your investment as it doesn’t match your goals, then you may consider exiting the scheme and rebalancing your mutual fund investment portfolio. 

Constant underperformance of the fund

If your mutual fund investment has been underperforming constantly for 3 years than its benchmark indices and peer funds, you must exit the fund and transfer your investible amount to another mutual fund with a proven track record. However, before withdrawing your lump sum investment and investing in another scheme, ensure to conduct a qualitative and quantitative research of the mutual fund scheme where you are investing. 

Ending note

Patience is all you need when you invest in mutual funds. You must ensure to keep in check your financial goals in and avoid withdrawing your mutual fund investments due to sharp dips. Only if your investment constantly underperforms for a long time period, you can consider redeeming the lump sum amount to invest the same in another fund to meet your financial requirements on time.

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Whether the child wants to be a scientist or economist, begin investing ASAP. The top insurance company in India offers guaranteed pay outs at different stages and a waiver of premiums in case of the death of an insured parent. The child will receive the matured amount as a beneficiary to cater to any future needs. But choosing the right child plan is not a cakewalk. Below are a few factors to consider before making a purchase.

Inflation Rate 

It is expected to increase gradually in the second half of 2022-2023. India will see a 6.2% in October-December and 5.8% in January-March. So, the price of education is less likely to remain the same over the next few years. The overall goal amount from preschool to primary education is highly affected. Factor in at least 8-10% inflation while planning for a child plan to be on the safe side. This will help you receive inflation-adjusted ROI to grow the funds. 

Family Finances

This will help you determine how much to put aside in a child plan. Try not to invest more than you can afford. Use a calculator to figure out how much you will require that can smoothly cater to both education and hobbies of your kid. Further, they should also be able to lead a comfortable life when you are not around. Investors should think of picking a long investment horizon to be able to build sufficient wealth over time. 

Claim Settlement 

Settlement is the method by which an insurer will send money to the policyholder as compensation for death. The two major elements are cashless facilities or reimbursement. Try to work with a company that has already settled more than 90% of all claims made and can promise a quick and hassle-free process.You should only be required to present required documents with details like date and cause of accident and nominee information. The claim benefits will be provided as per the regulatory-mandated turnaround time. 

Current Education Expenses 

Start with answering questions like are you planning school fees or college costs? Would you like to send the child to a top institution in India or abroad? Are you aiming for a course that interests your children regardless of its popularity? Knowing all of these can help you determine the present education fees. Now you may pick the best child education plan that is ideal for individual requirement. 

Keep the goals and ambitions of your kids in mind. Talk to an insurance expert to know the different types of plans available. This can help ensure quality education without hiccups. 

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One such option is a ULIP, which comes under the life insurance category While it is generally advised to stay invested in a ULIP for the long-term, there are many who tend to surrender their policy rather quickly. Read on to know more as to why you should stay with your policy till the end rather than surrender it before the policy maturity.

What is a ULIP Policy?

A ULIP is a type of life insurance policy. You as an investor get to enjoy the dual benefits of investment and insurance in a ULIP plan. You get to invest in equity, debt, and balanced funds in this plan. The investment you make is based on your risk appetite and your requirements from the plan. 

The policy also provides life protection cover to the family of the policyholder. If the policyholder were to pass away during the term of the policy, the family would receive financial compensation in the form of a death benefit from the insurer.

Why stay invested in ULIPs?

As an investor, if you are wondering whether to stay invested in ULIPs or not, here are a few reasons why you should:

1. Steady returns

No matter what type of investment options you choose in the market, it does not provide quick returns to anyone and certainly does not returns a large amount. Most investors who invest in the market are there for the long run. They know that the returns they get over a longer period of time will be much greater than those of investors who stay in the market for a short period. By balancing your investments between equity and debt funds with a ULIP, you can ensure that for the duration of your policy, your returns will get accumulated enough to match your expected rate of return.

 2. Security

There are many financial instruments that you can take advantage of when it comes to investments. A mutual fund is another such financial instrument. However, compared to ULIPs, mutual funds mostly invest in the equity markets. Equity markets have a higher risk factor which means that the investments done in these markets are more exposed to market risks. The returns that you could get in the mutual funds could be lower than you could expect. The ULIP benefits on the other hand provide you with the opportunity to invest in both equity funds and debt funds. This helps in balancing investments. Investing in both of these funds ensures that your returns do not get impacted due to the market risk.

3. Transparency

As an investor, you would want to know where your money has been invested. You may not get that kind of transparency when you invest your money in mutual funds. In ULIPs, whether you invest in equity funds or debt funds, you can track your portfolio which gives you an idea of which stocks, securities, and bonds your money is being invested in and the returns that you are getting on your investments.

4. Life cover

In this type of insurance, your loved ones are provided with a life protection cover to cope with life risks in your absence. If you pass away during the term of the policy, your dependents would be at risk financially. However, the life cover provides them with financial compensation. This money will help them manage vital expenses and be prepared for emergencies as well.

These are the reasons why you as an investor should stay invested in your policy. It is always better to discuss with your insurance advisor about the plans, tenure, and other ULIP benefits, such as returns before you make an investment in one. Always keep in mind that ULIP insurance should be looked at as a long-term investment rather than something short-term.

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An online business loan is one of the most efficient and quickest ways for a business to stay afloat and grow. From new product launches to investment in infrastructure and management of cash flow, a business loan can help scale your finances.

How can you place the application for a business loan?

There are 2 major routes through which you can place the application for a business loan – either by visiting the nearest lender’s branch office or through an online procedure. However, before placing the business loan application, use the online business loan EMI calculator to be aware of the maximum loan proceed as per your eligibility and suitable repayment tenure as per your cash inflow. Also, it is recommended to check the business loan eligibility parameters set by the lenders and the documents required before hitting on the business loan apply online button to lower your rejection chances. 

Step-wise approach when ​applying for an online business loan – 

Decide on the business loan type –

Many often associate business loans with stringent eligibility parameters, accompanied by long-term waiting periods. A business loan is relatively simple to avail of today. With a wide variety of credit options to select from, you can avail of a suitable business loan based on your business requirement, which may range anywhere from equipment finance to business expansion. Standard business loans involve working capital loans, SME and MSME loans, or machinery loans.

Once you have decided on the business loan type, you can apply with the selected lender through the online platform. 

Keep necessary documents handy 

Do you know why at times business credit sanctioning may witness delays? Mostly, it is owing to the lack of proper preparation. Thus, before you place the application for a business loan, ensure to prepare yourself with crucial loan documents. Doing so will speed up the loan procedure naturally. The important documents that you must keep handy while placing the loan application online are – 

·       Correctly filled up the loan application form

·       Detailed business plan

·       KYC documents of business

·       KYC documents of business owner

·       Past 6 months business bank statements

·       Audited balance sheet for past 2 years

·       Income tax returns for the past 2 years

After filling up the business loan form and document submission, your business loan application will undergo different verification stages. Once the verification is done, your loan application will be approved, and the lender will let you know about its terms and conditions and loan rate. Post signing the loan amount disbursement paperwork, funds are disbursed into your account. 

Note that while you sign the final business loan documents, carefully read all the lender’s terms and conditions involving the repayment tenure, processing fees, foreclosure fees, and other fees and charges to eliminate any chances of future discrepancies.

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One must read Finotec company review and consider currency risk when entering international markets, whether through a conventional investment, the sale of real estate, a business acquisition, or income. Some people could be willing to attempt to profit from exchange rate volatility because they feel at ease with the risk.

Effect of Exchange Rates on Currency Returns

As an illustration, suppose you want to invest in Paris Prints, a fictional French apparel manufacturer. Shares of the company are now trading at €50, which translates to £45.02 (50 x 0.9004) at the current EUR/GBP exchange rate. Your initial investment for 100 shares would be £4502. You don’t carry out your order, though, until two days. Despite a Brexit statement, the share price of Paris Prints has stayed unchanged. However, the pound lost value to the euro. Therefore, with the new exchange rate of 0.9250, you would be spending £4625 to purchase the shares at the higher price of £46.25. The local currency has declined, making overseas investments more expensive to buy even though the asset’s worth hasn’t changed. Because of this dynamic, currency risk always exists and needs to be handled whenever there is an exposure to an asset valued in a foreign currency. This is an important aspect of Corporate FX Risk Management Solutions.

How can GBP be hedged against currency risk?

Before you begin hedging your foreign exchange risk, you should,

• Do some research. Discover financial markets with various online resources available on YouTube and other platforms.
• Work on your hedging technique. Trade with a demo account in a risk-free setting.
• Set up a currency risk hedge today. With an easy online form, you may create a live trading account in just a few minutes.

It is understandable why hedging GBP exposure has become a hot topic of discussion since the 2016 referendum, given the uncertainty surrounding Brexit on the minds of traders based in the UK and the EU. However, there is no set method for hedging one’s GBP currency risk, just like there is no set method for hedging any other aspect of a financial strategy. To effectively adapt a hedging strategy to a person’s financial goals, too many distinct factors must be considered. To make sure that currency risk is properly handled and in line with these objectives, there are a few products and principles that can be used. These consist of ETFs, CFDs, Forward contracts, and Options.

When managing currency risk, it’s crucial to keep in mind that when you establish new FX positions to offset your exposure to foreign exchange, you’re also accepting the risk of those new holdings. The criteria for hedging FX positions themselves will vary.

Using Specialized ETFs to Hedge Currency Risk

Investing in a specialized currency exchange-traded fund (ETF) is one less common method of reducing foreign exchange risk. A currency ETF operates similarly to other ETFs in theory. Still, instead of investing in stocks or bonds, it holds currency cash deposits or derivative products that are linked to an underlying currency and reflect the fluctuations of that currency. For instance, the Invesco DB US Dollar Index Bullish Fund or the ProShares UltraShort Euro ETF. Depending on the needed hedging, a trader can go long or short on these ETFs to shield the value of an asset or cash flow from the fluctuation of a currency (or multiple currencies).

CFD Currency Risk Hedging

A derivative known as a contract for difference (CFD) can be used to reduce the risk associated with foreign exchange. A trader need not possess the underlying currency to start a CFD position. A CFD hedge operates because you agree to swap the price difference between the opening and closing prices of an asset, in this case, the currency. The trader would make money if the market went in the direction they anticipated, and they would lose money if it moved in the opposite direction. To reduce the currency exposure of the asset hedged, open a CFD position. As a leveraged instrument, CFDs only need a minimal amount of capital to enter the hedging. Additionally, cash settlement can be used to close the hedge, reducing the possible financial expenditure of the trade.

Utilizing Forward Contracts to Reduce Currency Risk

A forward exchange contract (FEC) is a type of derivative that enables someone to lock in a currency exchange rate for a specific future date. The advantage of a forward is that it can shield a person’s assets from fluctuations in the exchange rate by fixing a specific value at this time. When a forward is purchased, its cost or benefit is known, and the forward exchange rate is determined by depreciating the spot rate using interest rate differentials.

Hedging Currency Risk with Options

The right to convert currencies at a predetermined rate on a set date is granted by an option, but not the responsibility to do so. Puts and calls are two different categories of options. A put option shields an option buyer from a currency decline, whereas a call option shields an option from a currency rally. The advantage of such a technique is that, for a fee, a person can safeguard oneself against unfavorable movements.

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Importance of Credit Rating to Lenders:

• Safety assurance: Banks and lending institutions use the credit rating system to determine if the applicant can repay on time and a higher score gives them more assurance. 
• Secure investment: It is easy for banks to sanction the loan for companies or individuals with a higher credit rating as they see little or no risk factor attached to this investment decision and a decent return on investment as well.

Importance of Credit Rating to Borrowers:

• A higher credit rating makes it easier for the applicant to get a loan sanctioned as they are seen as low or no-risk customers by the bank.
• Higher the credit rating, the lesser the rate of interest that is levied by the banks or lending institutions. If you have a good CIBIL score and credit rating, then it would be fairly easy for you to avail a loan at competitive interest rates.

The Credit Rating Information Services of India (CRISIL) Limited, Credit Rating Information Services of India (CRISIL) Limited, and Credit Analysis and Research Limited (CARE), are some of the credit rating agencies in India.

How do credit ratings work in India?

Before you understand how credit score affects your loan application, it is important to understand how the credit rating system works:

• There are different agencies in India, and each of them has a credit evaluation algorithm of its own. 
• Major factors that affect the credit rating algorithm include timely repayment of past dues, supplied, current cash flow, working capital, business’s net worth, etc.
• These credit agencies collect monthly credit information from other financial institutions and partner banks in the country.
• Next, these agencies do their due diligence and prepare reports based on the credit rating affecting factors once the request is raised.
• Every individual or company is then graded based on this report and a credit rating is allotted to them accordingly.

Public and private banks, lending institutions, and even investors use this rating to understand the company’s financial positioning and net worth better. Lending institutions determine the loan eligibility of a company or an individual based on their credit rating itself. Higher your ratings, the better the chances of getting a loan at lower interest rates.

In conclusion:

Your credit rating determines if you are a viable loan candidate for banks and Financial institutions alike. If you need a loan at any time and want the process to be quick and hassle-free, it is advisable to keep track of your credit score and rating routinely. It is also possible to increase your score by paying dues on time, staying cash flow positive, ensuring there is no outstanding debt, etc. 

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What are ETFs?

It is a type of fund that invests in a basket of assets, including stocks, bonds, commodities, or even other ETFs. ETFs are popular because they offer investors a simple and cost-effective way to access a wide range of markets; click for more info. For example, an investor who wants to invest in the US stock market can buy an ETF that tracks the S&P 500 index.

What concerns should investors be aware of when investing in ETFs? 

Lack of liquidity-

One of the main concerns about investing in ETFs is the lack of liquidity. It can be challenging to sell your ETF units when you want to cash out, and it is because there is usually only a small number of buyers in the market for ETFs. It can lead to large bid-ask spreads, meaning you may have to sell your units at a lower price than what you paid.

Counterparty risk-

Another concern investors should be aware of is counterparty risk. It is the risk that the other party in a financial transaction will not be able to fulfill their obligations. For example, if you are investing in an ETF that tracks a basket of bonds, the counterparty risk would be the risk of the issuer defaulting on their payments.

Tracking error-

Tracking error is another risk that investors must be aware of when investing in ETFs. It is the difference between the performance of the ETF and the performance of the underlying assets it tracks. For example, if an ETF tracks the S&P 500 index, but only gains 5% while the index gains 10%, then there is a tracking error of 5%.

Limited history-

Another concern investors should be aware of is that ETFs have a little history. It means that there is not a lot of data available to assess how they have performed in different market conditions.

Regulatory risk-

Regulatory risk is another risk that investors need to be aware of when investing in ETFs. It is a risk that government regulation changes could adversely impact ETFs’ performance. For example, if the government decided to ban leverage in ETFs, this could harm the performance of leveraged ETFs.

Exchange-traded notes-

Exchange-traded notes (ETNs) are another type of investment that investors should be aware of. ETNs are similar to ETFs but unsecured debt instruments that banks issue. It means that there is credit risk involved with investing in ETNs. Investors should also be aware that any assets do not back ETNs, so if the issuer defaults on their payments, they could lose all of their investment.

The benefits of investing in ETFs

Despite the concerns investors should be aware of, there are also many benefits to investing in ETFs.

One of the main benefits of investing in ETFs is that they are cost-effective, and this is because they have low fees and expenses. For example, the expense ratio for the SPDR S&P 500 ETF (SPY) is 0.09%.

Another benefit of investing in ETFs is that they offer diversification, which means they can help protect your portfolio from the risks of investing in just one asset class. For example, an investor investing in an ETF that tracks the S&P 500 index will be diversified across 500 stocks.

Another benefit of investing in ETFs is that they are liquid, which means buying and selling units on the stock market is easy. ETFs are also traded on margin, so investors can use leverage to magnify their returns.

Despite the concerns investors should be aware of, there are also many benefits to investing in ETFs. These include the fact that they are cost-effective, offer diversification, and are liquid.

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The trend of purchases being made through loans, equated monthly installments (EMIs), credit cards, etc., is on the rise. Financial institutions are trying to encourage it by lessening the hassles, reducing paperwork, reducing the disbursement period, providing flexible repayment options, longer repayment tenure, and attracting interest rates. 

What are personal loans?

A personal loan refers to the money borrowed by an individual to fund their expenditures. It is a lump sum amount that is repaid over a fixed tenure. This kind of loan can be availed for a lot of different purposes. It is generally an unsecured loan, as no collateral is needed to avail a personal loan.

What are top-up home loans?

A home loan refers to the money borrowed from a financial institution to either purchase, renovate, or extend a residential property. A top-up home loan is the amount of money borrowed over and above the existing home loan. Home loans are secured loans wherein the borrower has to provide collateral to avail of such loans. 

Personal loans or top-up loans, which is better?

Usually, when an individual buys a long-term asset, such as a residential property, they might not account for all the costs involved, and more often than not, the expenses exceed the loan amount. The borrower can either go for a personal loan or top-up their existing home loan in such a situation. 

Here are listed some comparisons between the two.

• Being unsecured, personal loans interest rates are usually higher than a secured top-up home loan interest rate.
• Anyone can avail of personal loans at any time, but top-up home loans are provided to existing home loan borrowers only.
• Personal loans are disbursed faster compared to a top-up loan.
• Though top-up loans do not require additional paperwork, they are harder to get. In contrast, personal loans, though they require paperwork to be done, are easier to get sanctioned.
• Top-up loans are sanctioned subject to stricter eligibility checks than other loans. In contrast, personal loans do not require pre-approval checks.
• Top-up loans can be taken for a tenure of up to 30 years or the remaining tenure of the original home loan, whereas personal loans can be availed for a maximum of 5 years.
• More extended repayment periods of top-up home loans imply that the EMIs are lesser than personal loans with shorter repayment periods.
• Most financial institutions do not need documents to verify the purpose of the top-up home loan specified, whereas the purpose of personal loans does not need to be specified at all.
• Top-up home loans, when used for pre-defined purposes like expansion or renovations, the borrower can avail of tax benefits. In contrast, personal loans do not have any provision for tax benefits.
• Personal loans, when closed early, mandate a pre-closure charge. On the other hand, top-up home loans are free of these charges.

Personal loan or top-up home loan- which one to choose?

Both the loans come with their own set of pros and cons. Choosing one over the other is wholly based on the preference and requirements of the borrower. Suppose the borrower does not want to provide collateral, wants an instant loan, does not have an issue with the interest rates, and prefers the loan to be of a shorter period. 

In that case, they can opt for personal loan, but if the borrower has a good background and rapport with the bank, can meet the eligibility checks of a top-up loan, wants a lesser EMI amount and lesser interest rates, a longer repayment tenure for the loan, and does not need the loan sanctioned immediately, they can opt for top-up home loans.

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