A top up loan is a supplementary loan amount that you can avail on an existing loan, either for home loan, personal loan or loan against property. Your eligibility for a top up loan depends on whether you have made regular loan payments on your existing loans. You may apply for a top-up home loan either with the same bank or another bank with a Loan balance transfer. Top up interest rates on home loans are in the range of 8.9% – 12.7% and for personal loans it’s in the range of 11.5% – 25%.
Consider for a loan top up if –
- You require urgent funds to meet personal requirements.
- You require investment for business expansion, wedding expenses, vacation etc.
- You need capital to take long tenure funds at low interest rates.
- You already have an existing home loan, personal loan and property loan where your repayments have been up to date.
- You want to get an immediate loan with less or no paperwork.
The top up rates are closely linked to the loan tenure and interest rate on the home loan already availed from the bank.
Top Up Loan Eligibility –
- You can avail a top up loan if you have a prevalent loan from a particular bank and that bank is willing to give you an additional loan on your existing loan as you have already repaid a certain portion of the loan and made all the payments in a timely manner.
- You can apply for a top up loan by applying for a balance transfer loan with top-up loan from a different bank.
- You can apply to the new bank after a minimum repayment of 1 year of your existing home loan and upon possession or completion of the financed property.
- Individuals who have an existing home loan and are looking for more funds, can apply for the loan.
- Salaried and self employed who have prevalent home loan or have taken for home extension loan or home improvement can apply for this loan
Eligibility depends on two factors:
- Income of the borrower and ability to pay EMI’s – The total EMI burden should typically not exceed 65% of the net monthly income of the borrower. Longer tenures help with lower EMI’s and result in higher loan amount eligibility.
- Value of the property mortgaged – Banks typically lend upto 80% of the market value of the house at the time of sanctioning home loan. Over a period of time, the loan gets partially paid down with each EMI, outstanding loan amount reduces.
Top Up Loan Calculator
While you avail a top up on your ongoing home loan or a personal loan, undoubtedly you remain in confusion about its repayment option meaning what pattern does it will follow while paying back the loan. In case you avail a top up on your current loan, you have to pay a single combined EMI for the existing loan as well as for the additional top-up taken on your present loan.
Home Loan Top up
- Interest Rates: Home Loan top up is available to existing borrowers against the property mortgaged. Interest rate on top up on home loans are moderately higher than the home loan interest rate.
- Loan Amount: Loan top up loan can be availed if you have an existing home loan. You can get top up either from the existing bank or transfer to other bank. Your top up amount depends upon the value of the property you mortgage and also on your income.
- Loan Tenure: The maximum tenure for a top up loan is 30 years. It also depends on the remaining period of your existing loan.
- Tax Benefit: Under section 24, tax benefit on top up loan can be availed provided, the top up is taken for home renovation or home extension. Other purposes are not liable for any tax exemption.
Personal Loan Top Up
- Interest rate: Top up on personal loan can be availed if you have an existing personal loan. You can obtain top up either from the existing bank or transfer your loan to other bank. You can get top up after 3 months of existing loan disbursement at the rates similar to the existing personal loan rates of 10.75% to 24%.
- Loan amount: A top up of minimum Rs. 1 Lakh can be availed after paying 3 EMIs of existing loan.
- Collateral: For a top up loan, no security or collateral is required.
Loan tenure: Top up on personal loan can be taken for 1 to 5 years depending upon the remaining tenure of your existing loan.