What is a complementary loan? Are They Similar To Personal Loans | Photo credit: iStock images
A complementary loan is in addition to an outstanding loan in the event of a financial emergency. Lenders often offer better interest terms to these customers because they already know about their credit history etc. This is much better than liquidating assets such as gold and real estate in case the borrower is sure that the money will arrive in the near future to mitigate the increase in interest expenses.
However, borrowers generally only become eligible for top-up loans if they have paid their EMIs regularly for at least a year. A borrower’s credit and repayment history is a key determinant of their eligibility for a top-up loan. The complementary loan is generally granted on the same conditions, interest rate, etc. than the initial loan.
In the case of home loans, banks typically offer 70-80% of the cost of housing, but few go for the full loan offered so that the remaining amount can be used as a supplement in the future, experts say. . In addition, the part of the loan already repaid by the borrower to the bank can lend again.
There is no condition on the end use of the best loans, unlike home loans where the amount disbursed must be used for the construction or purchase of a house or apartment. A premium loan can be used as a personal loan on just about anything like personal emergencies etc. For example, they can be used for furnishing, renovation, etc.
These loans are treated by lenders as mortgages and therefore have relatively higher loan amounts, a longer term, and a lower interest rate than a personal loan.
The biggest advantage of such a loan is that the borrower does not need any additional documents or documents, and the bank already has the customer’s KYC details. The whole process is streamlined as the prime loan offers are automatically provided by the banks and the borrower does not have to reapply for the loan.