Best Home Loan Top Up in India : Eligibility and Benefits

top up loan on home loan

6 mins read

Last updated on 28th May 2024

A top-up loan on a housing loan is a boon for existing home loan borrowers in India. It provides additional funds without requiring any extra security. The interest rates are usually lower, and it comes with tax benefits. You can use it for various purposes, including home renovation or extension. The repayment tenure aligns with your existing home loan, and the maximum amount depends on your outstanding loan balance. Remember, a processing fee of up to 1% of the loan amount may apply.

What is a Top-Up Loan?

Imagine getting the financial power you need to make your dreams a reality without any sales talk. With these loans, you can bid farewell to high-interest rates and enjoy the ease of lower ones. It gets better! From renovating homes to expanding spaces, top-up loans are incredibly versatile. And, if you use them strictly for home construction or renovation, you may even enjoy tax benefits. So, no long waits, no hassles – just quick and seamless processing.

Financial Freedom: Achieve Benefits with Top-Up Loans

Any borrower looking for a balance transfer on their house loan can avail of a top-up loan too. Whether you're salaried or self-employed, as long as you meet the home loan top-up eligibility criteria, you can apply. Existing home loan borrowers with a clear track record of six months of EMI repayments can easily qualify, with some flexibility in case of a minimum 1 EMI bounce. Also, if you have an approved home loan balance transfer request and a clear repayment record of 1 year, you can enjoy this facility hassle-free. Since you're an existing borrower, you won't have to submit any more documents; the lender already knows your profile. In most cases, just submit income proof to show you can manage the additional borrowed amount. It's a convenient way to access extra funds and achieve your financial goals with ease!

Suggested read: Home Loan Eligibility

Tapping into Tax Benefits on Home Loan Top-Up

When you use a top-up loan on a home loan solely for constructing, renovating, repairing, or extending your home, there are some great home loan tax benefits waiting for you. Under the Income Tax Act of 1961, you can claim these benefits under Section 80C and 24(b). If the top-up is utilized for home renovation or a rented-out property, deductions are available for the interest component under Section 24(b) without any limits. However, if it's for your residence, the maximum deduction you can claim is ₹30,000 under Section 24(b). On the other hand, for property purchase or construction, you become eligible for deductions under sections 80C and 24(b), up to ₹1,50,000 for the principal component under Section 80C.

Key Factors to Consider for Home Loan Top-Up Lenders

When applying for a home loan top-up, several essential aspects deserve attention to make an informed decision:

  1. Interest Rate: It's crucial to research and compare housing loan interest rates from various lenders. Existing lenders might offer a higher rate for the top-up, so a thorough evaluation is essential.
  2. Loan Tenure: Keep in mind that top-up loan repayment tenure is typically shorter than the original home loan. Existing customers may get longer tenure options.
  3. Terms and Conditions: Carefully review the lender's terms and conditions to understand any hidden fees, prepayment penalties, or other crucial factors.
  4. Eligibility Criteria: Check the eligibility criteria to ensure you meet all the requirements for a smooth loan approval process.
  5. Loan Amount: Consider the maximum top-up loan amount available, ensuring it meets your financial needs.
  6. Processing Time: Look for lenders offering quick processing times to access funds promptly.
  7. Customer Service: Evaluate the lender's reputation for customer service to ensure a seamless experience.
  8. Additional Charges: Be aware of any additional charges like processing fees or administrative costs.
  9. Existing Relationship: Explore top-up options from your existing lender, as they might offer better terms for loyal customers.
  10. Loan Purpose: Clarify the usage restrictions of the top-up loan and ensure it aligns with your intended purpose.

By considering these factors, you can confidently choose the right home loan top-up lender that best suits your financial needs and goals.

List of Top-Up Loan Interest Rates Across Indian Banks

Bank Home Loan Top-Up Interest Rate (p.a.)
HDFC Bank 8.30% to 9.15%
SBI Bank 7.90% to 10.10%
ICICI Bank 6.90% to 8.05%
Axis Bank 7.75% to 8.40%
Union Bank 6.80% to 7.35%
Bank of Baroda (BOB) 7.45% to 8.80%
CitiBank 6.75%

Having a clear understanding of overall top-up loan interest rates across Indian banks helps evaluate the annual EMI options using a top-up loan EMI calculator.

Suggested read: Home Loan Eligibility Calculator

Streamlined Process on How to Get Home Loan Top-Up

There are many methods by which you can apply for a home loan top-up. And usually, different home loan provider bank in India have different approaches. But here’s one common way of opting and using for the home loan top-up: Directly visit the bank branch where you have availed of your home loan and apply instantly.

Go online. Visit the bank’s official website and apply on the bank website. Enter all the required details and fill necessary forms. And after this, the bank official would get in touch for further procedures and document requirements. Anyone can make the repayment of the home top-up loan on a monthly payment/installment basis. The maximum time granted is 15 years. The usual term of a loan depends on various factors, namely, age, maturity of the loan, age of the property, etc.

The time of repayment also depends on the scheme of compensation that you choose. And this is how you can get your top-up loan on a home loan without any hassle and stress.

As we conclude our conversation, let us reiterate more about the remarkable potential of home loan top-up. It's an extraordinary opportunity that allows you to tap into additional funds for various endeavors. The interest rates are attractively low, and there are even tax benefits to be enjoyed. Whether you envision renovating your space, extending your home, or accomplishing personal aspirations, the top-up loan empowers you to make it happen. The application process is smooth and hassle-free, ensuring you can access the funds you need in no time.

Published on 28th July 2023