A top-up loan is an additional loan that you can take on top of your existing home loan. Many banks and financial institutions offer this option to their home loan customers.
It functions like a personal loan but with lower interest rates, making it more affordable. The repayment period for a top-up loan depends on the remaining tenure of your home loan.
Since home loans typically have long terms, the top-up loan also offers a longer duration for repayment, keeping the EMI amounts manageable.
Benefits of a Top-Up Loan
One of the main advantages of a top-up loan is that it doesn’t require any additional security or collateral, as you already have a home loan with the bank.
You can use the loan amount for various purposes, such as home renovation, repairs, or even personal or business needs.
If the loan is used specifically for home construction or renovation, you may be eligible for tax exemptions as well.
Loan Terms and Conditions
Before approving a top-up loan, banks assess your payment history for your existing home loan.
If you have a good track record with your EMI payments, getting a top-up loan becomes easier. However, if your payment history is poor, the bank may reject your application.
Generally, the top-up loan amount can be up to 70% of the original home loan amount or the current market value of your property. Different banks may have varying rules regarding this.
How to Apply for a Top-Up Loan
To apply for a top-up loan, you can either visit the branch of the bank where you have your home loan or apply online through the bank’s website.
Once approved, you’ll need to pay the monthly installments for the top-up loan alongside your home loan EMI. This makes it convenient to manage both payments together.
