About a top-up loan:

A top-up loan, true to its name, is a facility of availing further funds on an existing home loan. When you have a loan that has already been disbursed and under repayment and if you need more funds, why go about the loan formalities all over again? You can simply avail additional funding on the same loan thereby minimizing time, effort and cost. Your existing basic documentation and collateral is sufficient to provide you more funds. You just need to provide minimal papers to avail the top-up loan.

Who can apply?

You can avail a top-up loan from a lender if you already have an ongoing loan facility (home loan, home improvement loan or home extension loan) with them and have taken possession of the financed property. This simplifies their procedural formalities and makes further funding quick and easy. Top-up loan can also be availed when you opt for balance transfer (shifting your loan from one lender to another). In either case, you can apply after a repayment track record of minimum 1 year of your existing home loan and upon possession or completion of the financed property.

Loan term

You can repay the top-up loan in monthly instalments (EMI) over a maximum term of 15 years. The actual loan term depends on factors such as your profile, age at maturity of loan, age of the property at loan maturity, etc. The term would also depend on the specific repayment scheme opted by you.

Maximum loan amount

The maximum amount of top-up loan that you can avail depends on factors such as your present income levels, other loan obligations, etc. and is subject to your outstanding home loan plus the top-up loan being offered, not exceeding 75 to 80% of the market value of the property. However, on an absolute basis, the maximum amount of top-up loan on home loan possible is Rs. 50 lakh.

INTEREST RATE

Generally, the interest rate applicable to top-loans is the same as that applicable to home loan or slightly higher. You may however be reasonably confident that the interest rate on the top-up loan would be less than that on other consumer or commercial loans.

DIFFERENT PURPOSES FOR WHICH A TOP-UP LOAN CAN BE AVAILED

This loan may be availed for a variety of reasons such as meeting costs of a wedding in the family, medical expenses, education expenses, etc. The funds from this loan can also be utilized for professional and business needs. However, this loan cannot be utilized for any speculative activity.

ADVANTAGES OF TOP-UP LOANS

Top-up loans have a number of advantages over other sources of funding. Some of them are:

• Availability of loan for a variety of personal or professional needs.
• Minimal documentation and quick loan processing as you already have an ongoing relationship and a repayment track record with the lender. You are in an advantageous position if you are in urgent need of funds.
• Lower rate of interest compared to consumer/commercial loans.
• Longer loan tenure of 15 years compared to consumer/commercial loans.
• Simple and easy repayment option in the form of EMI.