Topup Loan against Home loan- Everything you should

You might be wonder that what is topup loan against home loans. all about and how it works. Sometimes you need funds for your urgent requirement, and you might be surprised to know that you already have that hidden friend who can help you in this time of crisis. If you still wondering what I am talking about then without any more surprise, I will tell you that it will none other than your existing home finance. Now the big question arises, how top-up loans are linked with home loans and how to get it & how you spent this amount on other expenditure.

Topup loan
top up loan

Let us discuss all aspects of Top Up loans

Meaning of topup loan

Top-Up loans is an additional loan facility that can be linked with your existing home loan. Normally all nationalized and private sector banks offer this facility to their customers. In short, all customers with an existing home loan can apply for a Top-up loan. 

Let us discuss with an example to understand it.

For example, you have an approved home loan of Rs 40 lakhs for 20 years tenure. After a repayment period of 8 years, your net outstanding loan balance is Rs 27 lakhs. Now suppose at this point of time you urgently need money for let say for home renovation or for any other major personal expenses, you can apply for top-up loans. Surprisingly it will be a cheaper option as compared to a personal loan.

Topup Loans: Benefits

There are many benefits offered by top-up loans. Few are mentioned below for your easy reference.

Minimum documentation required- It required minimum documentation as it is connected with the existing home loan.

Minimum interest rate- The interest rate is also cheaper as compared to a personal loan.

Faster approval process- The approval process is much faster as compared to other loans.

Topup loan: Eligibility criteria

As mentioned earlier, Top-up loans are available only for existing home loans, home extension loans, or home improvement loans with the subject to fulfilling certain conditions before granting the loan. Financial institutions first check your track record, credit report, and your repayment history. If you pay your EMI on time & your credit report is ok, you will get it very easily.

Topup loan: When to apply

You can apply for Top-up loans at any time during your existing home loan tenure, but it should be after 12 months of existing home loan. This 12-month period bank use as checking your EMI repayment capacity.

Topup loans: Documents required for apply

You need to submit the following documents for all applicants and co-applicants to for apply Top-Up loans: –

Singed Application for Top-Up loans- you need to fill & singed the required application form

Identity Proof – Aadhar or any other identity proof

Residence Proof- Aadhar/Voter card

Income Proof- Form 16 or Income tax Return

Property ownership related documents

Any other document as specified by the bank during his process

Top up loan eligibility
Top up loan eligibility

Topup Loans: Processing Fee during apply

Well, it purely depends on your bank or financial institution. Normally it is a new request so banks charge a processing fee as per their set standard rates but sometimes it is negotiable and can be waived off the processing fee.

Topup loan: Tenure for repayment 

It is also varying bank to bank but in the normal case as it is a Top-up loan on your existing home loan so tenure will be your existing home loan balance period.

Rate of Interest

The interest rates charged on top-up loans are slightly higher than what you pay for your home loans but surely it is very much cheap compared to personal loan interest rates.

Collateral/Pledge against loan

Collateral means pledged your asset as security. As your Top-Up loan is linked with your existing home loan so you need not give a separate pledge for Top-Up loans.

Avail Topup loans along with balance transfer

A balance transfer loan means you can transfer your existing balance home loan from one bank to another. You can apply for a Top-Up loan along with an existing balance transfer home loan.

Role of Co-applicant

Adding a co-applicant is always helps you to the maximum loan amount. Especially adding women as co-applicant will help you get a better interest rate. Generally, they are close family members such as mother, wife, brother, etc.

Restriction of usage

There is no such restriction of usage of Top-Up loans. In General, you need not disclose these things and can utilize a Top-Up loan for various purposes such as Home renovation, Home improvement, or even on your personal expenses like holiday or other exp. However, in any case, it cannot be utilized for any speculative purposes.

Frequently Asked Questions

Q. Is it good to take top up loans?

Ans. Yes, surely it is good to take it as it required fewer formalities compare to other loans.

Q. When can I take top up loans?

Ans. You can avail of it any time but usually, it is at least 12 months after taking a home loan.

Q. Who are the major banks to provide top-up loans?

Ans. All major banks provide top-up loans. SBI and HDFC are the major players in providing it.

Q. Can I apply for top-up loans online?

Ans. Yes, if you are an existing customer with a bank, you can directly apply online with the bank website. Accordingly bank representative will contact you at your convenience. Similarly, you can contact a bank representative over the phone. 

Q. What is top up loan interest rate?

Ans. The top-up credit interest rates start from as low as 6.75%. Generally, it is an additional .5% to 1% of existing home loans.

Q. What is the maximum term for top up loans?

Ans. The maximum term for a loan is 10 to 15 years depending upon your existing home loan balance tenure, your current age & age at the time of maturity of the loan, earning capacity & current EMI.               

Q. How to calculate Top up loans?

Ans. Financial institutions will check the top-up loan amount, after considering the EMI of your existing home loan.          

Q. Can I top up personal loan?

Ans. Yes, you can top-up personal loans as well but it is not a cheaper option.

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