Top-Up Home Loan: Top-up home loan is an easy and affordable way to add extra money to your existing home loan. With low interest rates and long EMI periods, you can meet needs like home renovation, education or medical expenses.
Top Up Home Loan Benefits: Do you know that by taking a little ‘top-up’ on your home loan, you can easily get extra money for your needs? Top-up home loan is an option that provides you a new amount by increasing your old loan, that too at a lower interest rate than a personal loan or credit card. Be it repairing the house, educating children or dealing with sudden big expenses. It is a smart and easy way to meet your financial needs…
What is Top-up Home Loan?
Top-up home loan is exactly what the name suggests. This is an additional loan on your existing home loan. If you have been paying EMIs on time and your home loan record is clean, then you can top up your old loan instead of taking a new loan. The interest rate for availing it is often lower than that of a personal loan or credit card.
How does a top-up loan work?
Banks give top-up loans to those customers who have paid their home loan EMI on time. Usually, the bank allows you to pay EMIs on time for one year and provide additional funds if the property value increases. The top-up amount is added to your existing loan balance and you pay the EMIs in the same way, just with a slightly increased amount.
How much can you borrow?
The top-up loan amount depends on the current market value of your property and the loan-to-value (LTV) limit of the bank. Most banks allow up to 70-80% of the total loan (existing and top-up) property value. For example, if your house is worth Rs 1 crore and the existing loan is Rs 50 lakh, the bank can give you a top-up of Rs 20-30 lakh.
Where can you use top-up loan?
Top-up loan is not limited to just home related expenses. You can use it for many purposes. Such as home repairs and renovation, paying medical bills, children’s education expenses and consolidating high-interest debt. Keep in mind that if you take it for business or speculative purposes, the bank may ask for additional documents.
Why is top-up better than personal loan?
low interest rates: Top-up loans are available at home loan rates, which are often 2-4% lower than personal loans.
Less Paperwork: The bank already has all your details.
Long Refinance Period: This means lower EMI and easier payment.
Things to keep in mind while taking top-up
- Top-up is easy, but it increases your total debt.
- Check the new tenure and EMI hike carefully.
- Understand the total interest and loan period.
- Make sure that increasing the loan does not set back your financial goals.
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