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✓ Home Loan from ₹2 Lakhs To ₹15 Cr ✓ Multiple Lending Partners ✓ Interest Rates Starting @ 8.50%

What is Top Up Loan on Home Loan

A top-up loan allows you to borrow more money from a bank than what has already been lent to you. You can avail of a home loan top-up in case you want to renovate the home you plan on purchasing or if you change your mind and decide to buy a home that costs a little more.

A home loan top-up can also help you take care of expenses such as house registration fees, brokerage or maintenance charges if the amount you borrowed initially cannot cover them. There are several advantages of going for a top-up on your home loan.

Best Home Loan Top-up Interest Rates

The lower possible interest rates at which you can get a top-up on a home loan from top Indian lenders are:

Lender Name

Starting Home Loan Top Interest Rate (Per Annum)

Bajaj Housing Finance Limited

8.60%

PNB Housing Finance

8.50%

ICICI Bank

8.75%

Home First Finance Company

9.50%

Union Bank of India

8.60%

HDFC Bank

7.20%

SBI

7.05%

Axis Bank

7.70%

Bank of Baroda

7.45%

Citi Bank

6.75%

Maharashtra Bank

7.55%

 

Benefits of a Home Loan Top Up

Below mentioned are the benefits of a home loan top-up:

  • You can avail a home loan top up at an interest rate already applicable to you. Or, you can get the same at a lower borrowing rate.

  • You can use the money you have availed as a home loan top for various things, from revamping your home to taking care of the registration/transaction charges.

  • Depending on the bank you take it from, you can even use the top-up money for personal and business expenses.

  • If you strictly use the top-up money for construction or renovation purposes, you can claim tax benefits under various sections of the Income Tax Act of 1961.

  • Given that you will be dealing with the same lender for a top-up, your approval will come in relatively quickly and easily.

Top-Up Home Loan Eligibility

Any borrower wishing to avail of a balance transfer facility on their house loan can avail of a top-up loan facility.

  • Both salaried as well as self-employed individuals can apply for a loan as long as they fulfill the top-up loan eligibility criteria.

  • Existing home loan borrowers with six months of clear EMI repayments (flexibility is offered in the case of a minimum 1 EMI bounce).

  • Applicants with an approved home loan balance transfer request with a clear repayment record of 1 year.

Documents Required for a Top-Up Home Loan

Given that you will be taking a home loan top-up in the capacity of an existing home loan borrower, you will not have to submit any more documents since the lender is already familiar with your profile. In some cases, all you will need to do is submit income proof to prove that you can pay off the extra money you are borrowing as well.

How to Apply for a Home Loan Top-Up?

Applying for a top-up home loan is a straightforward process. You can choose from one of the two following ways:

  • Visit the bank branch with which you currently have a house loan account and apply for the top-up loan directly.

  • Login to the bank website and apply for the top-up home loan online. All you have to do is leave your contact details, and a bank representative will contact you.

Tax Benefits of Home Loan Top-Up

If you are strictly using a home loan top-up for constructing, renovating, repairing or extending your home, there are several tax benefits that you can avail for the same.

You can claim these tax benefits under Section 80C and 24(b) of the Income Tax Act of 1961.

In case you are using the money to renovate, alter or repair a home that you have rented out, you can only claim deductions for the interest component under section 24(b). In such a scenario, there is no limit on the deductions you can claim on the interest component of the top-up loan you will repay.

But, if you are occupying the property yourself, the maximum deduction you can claim is ₹30,000 under Section 24(b) for the same.

On the other hand, if you are using the money for purchasing or constructing the property, you are eligible for tax deductions under sections 80C and 24(b) of the IT act for the principal and the interest component you will pay annually, respectively. Under Section 80C, you can claim deductions of up to ₹1,50,000 for the principal component.

Factors to Consider When Evaluating Home Loan Top-up Lenders

It is important to note certain aspects when applying for a home loan top-up. These include:

  • Interest Rate: When you apply for a top-up home loan through an existing lender, there is a possibility that it may be offered at a higher interest rate. This is why you should conduct enough research to compare the housing loan interest rates levied by different institutions.

  • Loan Tenure: Lenders typically offer existing customers a longer tenure. However, the home loan top-up repayment tenure is usually shorter than the allotted tenure on the home loan.

  • No Prepayment Penalty: The most notable aspect of a top-up home loan is that it can be prepaid without having to pay the penalty.

Home Loan Top Up FAQs

✔️What is a Top-up Home Loan?

A top-up loan is an additional credit you can avail of over and above the existing loan. This option can be used when getting a balance transfer. A top-up home loan is a great way to avail additional funds for interior decoration, home renovation, etc., as it involves minimal documentation.

✔️Who can avail of a Top-up Home Loan?

An existing borrower can avail of a top-up home loan. However, it can only be availed after the borrower has paid a certain number of EMIs to repay the loan.

✔️What are the documents required for a Top-up Home Loan?

Some of the documents required to get a top-up home loan include proof of identity and residential address, proof of income, and property papers. Depending upon the lender, you may have to submit other documents.

✔️What is the maximum amount that can be availed as a Top-up home loan?

The available top-up home loan depends upon the sanctioned initial loan amount of all the home loans put together. It typically ranges up to ₹50 Lakhs depending upon the lender’s policies.

✔️What is the maximum term for which I can avail of a Top-up Home Loan?

The maximum loan tenure offered for top-up home loans is usually 15 years or till your retirement, whichever is earlier.

✔️What security do I have to provide for a Top-up Home Loan?

When getting a top-up home loan, you must typically provide a security interest on the property or pledge collateral as requested by the lender.

✔️Can Top-up Home Loan can be used for a medical emergency?

Yes, a Housing Loan Top-up might be your saviour in any sort of medical emergency. If you have already obtained a home loan, top-up loans can be a quick option to meet your immediate financial demands, rather than choosing a personal loan or anything like a loan against a mutual fund or a fixed deposit.

✔️Can a co-applicant get Top-up loans on a housing loan?

Yes, if you apply for a top-up loan with a co-applicant, that person essentially becomes a co-borrower and, as such, is liable for loan repayment and other responsibilities. If the debtor cannot repay the loan, the co-applicant is held equally responsible.