Top-up Loan: Features, Benefits and Eligibility Criteria

NEW DELHI: Top-up is a provision that helps you adding a certain amount or topping up some amount in your existing home loan amount. Those who already have a home loan and make the repayment on time can always apply for a top-up loan.

Top-up loans

are offered by various private and nationalized banks to their loyal customers.

What are the features of top-up loans?

Salient features of the top-up loans are mentioned below:

• You can obtain or apply for a top-up loan for different purposes. This loan can be treated as a personal loan and further used for home renovation, furnishing, home decor and other emergency fund requirement.
• The top-up loan is available for a time period of up to 20 years or until the balance tenure of the original home loan. Applicant's profile, income, age, and value of the property are considered in this case. Also, the tenure varies from bank to bank.
• The amount to be granted as top-up home loan differs from bank to bank. Moreover, the actual home loan amount and the new top-up loan amount should not be more than 70% - 80% of the value of the property.
• The interest rates of the top-up loans are available at the same rates as home loan rates. Some banks keep the top-up loan rates a few points higher as compared to the original home loan rate.

What are the benefits of top-up loans?

• The interest rates of the top-up home loan are lower as compared to the rates of credit cards, personal loans or car loans. These are often opted by the applicants as a cheaper option.
• The tenure of the top-up loans is longer as compared to the tenure of a personal loan, car loan or gold loan.
• Because you already are a bank's home loan loyal customer, therefore, your top-up loan application would be easily approved and disbursed. A loyal customer means you are never a defaulter in paying the EMIs from past one year or more.
• You can avail tax benefit from the top-up loan if it is used for home repairs, construction or extension. Also, if used for the education of your children.
• Balance transfer of home loan with a top-up loan is an option that is offered by various banks. If you choose this option, then consider the processing charges that need to be paid on transferring the loan to another bank, the foreclosure charges that would be incurred with the existing bank, and the difference in the rate of interest. So think of every aspect and choose the option that suits you best.

What is the eligibility criteria to obtain a top-up loan?
Mentioned below are the eligibility factors under which one can apply for top-up loan:

• You already have a home loan with a bank
• You should not be a defaulter. Your EMI repayment record of past one year should be good enough. Timely payments should be made
• The credit report must be in your favour
• You have made a valid mortgage in the name of the bank

Here are some of the most common questions asked about top-up loans:

1. What is a top-up loan?Top-up is a provision that helps you adding a certain amount or topping up some amount in your existing home loan amount.
2. Who can apply for a top-loan?Those who already have a home loan, home improvement loan or a home extension loan can apply for it.
3. What is the tenure of a top-up loan?The top-up loan is available for a time period of up to 20 years or until the balance tenure of the original home loan.
4. What are the documents required to apply for a top-up loan?
   • Proof of identity: Passport, Aadhaar card, voter ID card, PAN card, driving license
   • Salary slips for 3 months (in case of salaried applicants)
   • Proof of address: Rental agreement, passport, utility bills, etc.
   • Income details in the bank statement for 3 months
   • Passport-sized photographs

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