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Pros & Cons of a Home Loan Top Up

By Finserv MARKETS - Jul 29,2019
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Pros and Cons of Home Loan Top Up

home loan top-up can be a very useful source of quick, easy and low-cost credit during times of need. If you have been regular with your repayments, financial institutions are more than ready to give you a top-up loan to finance your immediate or long-term requirements. Whether it’s a marriage in the family, renovation, medical emergency, buying a car, you can lean on Bajaj Finserv home loan top-ups to get the money in your bank account within 24 hours and enjoy flexible tenures and competitive interest rates.

But before you decide to apply for a home loan top up, you should weigh the pros and cons and be absolutely sure you are taking the right step. So, let’s get some financial advice on this topic.

What is a home loan top-up?

A home loan top up is a loan taken from your lender over and above the loan amount that has already been sanctioned and disbursed to you. Depending on the financial institution, they require the borrower to complete at least 6 to 12 months of timely repayments before applying for a home loan top up.

The amount of top-up loan that you can avail varies as per your bank, Non-Banking Financial Company (NBFC) or HFC. Typically, home loan top-up amount and the outstanding loan amount should be equal to 80% of the property value.

The Benefits

1.  Flexibility

Whether you take a Bajaj Finserv home loan top up or from any other bank, you are free to spend the money any way you like. No one cares if you buy a car, a diamond ring or a drone to watch over your home.

2. Minimum documentation and faster processing

Home loan top-ups are the perfect recipe for instant, low-cost money without following a tedious process. Since you are an existing customer, there is minimal documentation required and the processing speed is super fast. If you are an existing customer Finserv MARKETS assures you a Bajaj Finserv home loan top up within 24 hours.

3. Tax Benefits

A home loan top-up is eligible for tax deductions under Section 80C and Section 24 of the Income Tax Act. However, you cannot claim tax relief if you have used the money for personal purposes. You are eligible for tax deductions if the money is spent on home renovation, remodelling and reconstruction.

4. Ability to spread your EMI outflow

If you take a personal loan, the longest tenure that is available for repayment is 5 years. With a home loan top up you have the opportunity to spread the loan to longer tenures as home loans last from 15-25 years. It helps to lower your EMIs significantly compared to personal loans.

The Disadvantages

1. You must be an existing customer

Financial institutions allow home loan top-ups only to existing customers. Lenders also keenly look at your repayment history before they decide to approve a top-up. If you have delayed a few times, you have reduced your chances of availing a top-up loan.

2. EMI inflation

While focusing on the immediate benefits of getting easy and cheap credit, we tend to forget that any top-up loan increases your debt liability. The top up that you have taken on your home loan will reflect as bigger EMIs in the future.

3. You repay more

Though you have the advantage of spreading your loan liability considerably with a home loan top up over the years, you eventually end up paying more in terms of added interest and other costs.

If you are planning to get a home loan top up, you can use the Bajaj Finserv home loan top up calculator to calculate your eligible top amount and also get an idea on the eligibility and documentation requirements. Finserv MARKETS helps you fulfil your dream of owning a home with loans that come with customized insurance plans to protect your family from unforeseen debt liabilities.

Also, read about how to reduce home loan EMI.

Finserv MARKETS, from the house of Bajaj Finserv, is an exclusive online supermarket for all your personal and financial needs. We understand that every individual is different and thus when you plan to achieve your life goals or shop for the gadget of your dreams, we believe in helping you Make it Happen in a few simple clicks. Simple and fast loan application processes, seamless, hassle-free claim-settlements, no cost EMIs, 4 hours product delivery and numerous other benefits. Loans, Insurance, Investment and an exclusive EMI store, all under one roof – anytime, anywhere!


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Bajaj Finserv Direct Limited ("BFDL") is primarily engaged in distribution of financial products and services through its digital platform (“Bajaj Finserv MARKETS”) and inter alia renders services of customer acquisition, providing preliminary credit support activities, fulfilment services and post-acquisition customer services to Banks, NBFCs, HFCs. BFDL is also a registered Corporate Agent (Composite) under valid IRDAI registration number: CA0551 valid till 10-Apr-2024 for solicitation and servicing of Insurance Products. Registered Office: Bajaj Auto Limited Complex, Mumbai – Pune Road, Akurdi, Pune – 411 035 CIN: U65923PN2014PLC150522