Residential property prices have been on the higher side in recent years in India. Consequently, more individuals are availing housing loans to secure the required funding for house purchase or renovation. Furthermore, lending institutions are also offering new features and benefits such as home loan top-up to encourage more borrowers to apply for a home loan.

What is a home loan top-up facility?

Home loan top-up is a facility provided by financial institutions to home loan borrowers. Individuals who require additional funding for diverse expenses can opt for this facility on top of their refinanced home loan without providing any collateral or meeting any additional eligibility conditions.

Who can avail a top-up loan?

A top-up facility on home loans is not available for all borrowers availing the housing finance from. Home loan top-up is only for those borrowers who opt to transfer the existing balance of their home loan to a new lender offering lower interest rates. Individuals should also hold a favourable credit score with no history of defaulting or late payments on their home loan EMIs.

Features of a top-up loan

Apart from knowing what is a top-up loan, you should also know some of the interesting features of the advance discussed below –

  1. Fast approval – One can quickly get a top-up loan approval since it requires no additional documentation. The duration after which a borrower can apply for a top-up advance depends on the lending institution they have obtained the advance from.
  2. No end-use restriction – You can fulfil your urgent financial needs with a top-up loan. They do not have end-use limitation and can, therefore, be used to fund diverse expenditures such as debt consolidation, wedding, education, home renovation, business expansion, and so on.
  3. Affordable interest rate – The interest rates on a home loan top-up are same or slightly higher than a home loan. However, the interest rates are lower compared to other unsecured credits with similar utility.
  4. Repayment tenor – The repayment period for top-up loans is 20-30 years, or with some lenders, the period remaining for existing home loan.

Benefits of a top-up loan

  1. Benefits of additional, high-value funding –

Since housing finance can be used only for residential property purchase or construction, a home loan top-up facility eliminates such limitation. You can use online tools like top up loan calculator to check the loan amount you are eligible to apply for. With the right eligibility, the loan amount can go up to Rs.50 lakh.

Once you have entered the necessary details in the calculator, it will display the amount you will save on refinancing your loan as well as home loan top-up amount you are eligible for. Additionally, you should also know the steps to apply for a home loan balance transfer to avail this facility.

  1. Income tax benefits –

If you have opted for a home loan top-up for house renovation, repair or construction, you can avail tax exemptions on the interest portion of your loan under section 24B of the Income Tax Act.

Nonetheless, to avail the exemptions, you must retain all documented proofs that establish the top-up loan amount has been used only towards the renovation of house property. One can claim an annual exemption of up to Rs.30,000 on the interest portion of EMIs paid for a self-occupied house. However, no limit has been mentioned yet for repairs carried out for the rented property.

Additionally, one should also keep in mind that there is no exemption on the principal as well as interest portion if the loan is used for any purpose other than the ones mentioned above.

Also Read: Why You Should Opt for Top-Up Home Loans Instead of Gold or Personal Loans

Application procedure for a top-up advance

After you know what is the benefit of top-up loan, you should also know the process to apply for one. Accordingly, you can follow the steps given below to apply for a top-up loan online –

  • Go to the home loan section of your new lending institution’s official website.
  • Access the online application form for top-up loans.
  • Fill in your personal, employment and contact details.
  • Enter the top-up loan amount and submit the application form.

Once you submit the form, the respective lending institution will get in touch with you.

Some lending institutions also provide pre-approved offers for a hassle-free application procedure. Apart from home loans, these offers can also be availed on other financial products such as loans against property. You can check your pre-approved offer by entering your name and contact information.

Thus, if you have opted for a balance transfer facility and require additional financial aid immediately, you can consider opting for a home loan top-up to secure the necessary funds. Make sure the EMIs for such advance sought remains within your repayment capacity for quick approval.


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