It is normal to avail loan when you require funds. However, if you already hold a home loan, availing top up home loan is a prudent choice. For instance, if you hold an HDFC Home Loan, you may be eligible to avail a top up on it.

Top up home loan is obtained over and above your present home loan and is frequently the best choice. While you can avail of a distinct loan, such as a personal loan, the terms and conditions of it may not be as convenient as a home loan. Additionally, as compared to new credit options, documents required for a top up loan are less as the lender or bank already has all your data/info from your ongoing home loan.

Many lenders offer Top up home loans when transferring your loan to another lender. So, what is meant by a top up home loan and how does this work? It is a loan provided to you along with your current home loan. You might think about it as a property loan extension without the spending constraints that come along with a home loan. As an outcome, you might use it for different reasons while still gaining benefits from the low interest rates.

Now that you know what top up home loan is, read more about this in detail:

Introduction to top up loan

Assume you availed of a home loan of Rs 80 lakh from a lender for a repayment tenure of 20 years. After 10 years, let us suppose you are left with a home loan outstanding balance of Rs 48 lakh. In such cases, you can opt for a top up home loan. However, to avail Top up home loans with ease, you must be a credible borrower who makes on-time EMI repayments.

The rising home loan rates can make it troublesome to pay your home loan EMI on time. Before applying for a home loan, you must check if you are eligible for it or not and then make a move.

What is the maximum amount that you can avail of on a top up home loan?

Overall Top up home loan’s sum plus your outstanding loan must not exceed 70 percent of the home or property’s worth, based on your lender.

The rising home loan rates can make it troublesome to pay your home loan EMI on time. Before applying for a home loan, you must check if you are eligible for it or not and then make a move.

Advantages of top up home loan are:

Now that you have understood what home loans top up are, here is an instant run through of top up home loan benefits:

∙       You can avail a high proportion of the home or property’s value, i.e., around 70 to 80 percent.

∙       You can plan out your loan repayment over the longer repayment tenure, which assists in reducing monthly EMIs.

∙       Interest rate on a top up home loan is just a few basis points more than your current home loan.

∙       Top up home loans might be used for different objectives, including home ameliorations like a gadget, furniture, medical bills, personal necessities, and higher education.

∙       Top up home loan approval process is simple if you have a property loan already and hold excellent payment history. In the same way, disbursals even are instant.

Suppose the fund is used for construction, acquisition, renovation, changes, and repairs. In this case, the tax deductions are allowed up to the limits of Section 80 C and Section 24 B. However, there are specific restrictions, so ensure to approach your CA.

Documents required for top up home loan

As you are an existing customer of the bank, you might not require submitting any additional documents for top up home loan as lenders already hold your documents like:

∙       Address proof

∙       KYC

∙       Income proof

∙       Property papers

∙       Account statements

∙       Workplace proofs

However, you might require sharing your latest bank statement, income proof etc., with the lender.

What are the important Top up home loan eligibility requirements?

Qualifying conditions for a top up home loan are the same as those for a home loan offered by a lender with whom you are applying for or previously applied for a home loan. It might differ from one lender to another. However, there are some important things to consider. These include:

∙       You must have a good repayment record. This means you must witness no EMI bounce.

∙       In case there is any EMI bounce, it must be handled well before your next loan EMI is due.

∙       LTV must not surpass over 70-80 percent of your property value.

∙       Lenders also will evaluate your loan repayment track history, including your credit score.

Ending note

For a home loan, you will need your current bank statements, CIBIL score, income proof etc. Before you place the application for a home loan, ensure to check you have all your documents for a hassle-free experience. Once you have accumulated all the documents, place the home loan request as soon as possible for a speedy process. Note that before availing of a home loan, you must compare amongst different lenders to choose the one providing the best offer as per your requirement. You can do the comparison using the HDFC Home Loan EMI Calculator.

In the case of Top up or balance transfer home loan option, you might require producing your basic KYC documents and property linked documents. Top up home loan is an extremely convenient way to raise funds. Here, you as a property owner must already hold a home loan to be eligible for a top up home loan. In case of any emergencies, you must directly ask the lender about the Top up home loan option instead of opting for any other loan. Other loan options must be avoided, as a top up home loan is one of the cheapest ways to fund your loan. If you have paid your money for twelve months without missing out on a single instalment, then you may be eligible for a top up home loan. The loan amount that the lender disburses depends on the number of EMIs paid. For instance, after twelve EMIs, the lender might sanction 10 percent of your original home loan. And after 24 EMIs, you may be eligible for 20 percent of the home loan. Limit sanctioned as a top up loan amount differs with every lender.

There are some major things that you must know when availing a top up home loan:

∙       Applying for a top up home loan may involve documentation: For a few lenders, the procedure is the same as availing of a home loan. Thus, you may require submitting personal documents like address proof, document proof, income proof, and identity proof.

∙       Loan repayment tenure differs from one lender to another. For instance, the State Bank of India (SBI) endows a top up loan for up to thirty years, while Indian Bank provides up to 10 years of repayment tenure. Few banks, such as Bank of Baroda, may determine your loan amount depending upon your repayment tenure basis your age.

∙       Interest rates can be slightly more than home loan interest rates. They also might vary based on your credit profile.