Advantages of a Home Loan Top-Up Over a Personal Loan

Last Updated : March 10, 2021, 5:26 p.m.

A loan is helpful in times when your important expenses are stuck because of the shortage of money. At this point of time, people generally prefer taking a personal loan. Even though it is the best option for new borrowers but not for a home loan borrower. You might be surprised after reading this but the fact is that a home loan borrower can enjoy many benefits of a top-up loan as compared to a new personal loan .

Here we have given the features of a top-up loan and a personal loan and later given the advantages of going for a home loan top-up .

Features of a Home Loan Top-Up

Read below what are the features of a top-up home loan:

• Available only for an existing home loan borrower.
• Interest rate starting from 7.50% per annum.
• Tenure of the loan can go up to the maximum tenure of your home loan (10-20 years)
• Maximum loan amount depends on the outstanding balance of the existing home loan,
• The loan amount can be used for different purposes such as buying furniture for your home or renovation or any other personal need
• If the money is used for renovation or extension of your home, you can get tax benefit
• The interest rate on a home loan top-up is low
• Loan process is smoother for existing borrowers as well as those transferring their home loan
• There is no mortgage required to submit to the lender for the facility

Features of a Personal Loan

• The interest rate on a personal loan starts from 10.75% per annum
• Maximum tenure you can get is 5 years
• You get the loan for a minimum lock-in period of 1 year
• The maximum loan amount you can get is 40 lakhs
• The loan is approved on the basis of your income and credit history
• Unsecured personal loans can be taken without submitting any asset
• The approval time is generally 3-5 days

Advantages of Home Loan Top-Up

Look at the table below showing the difference between a home loan top-up loan and personal loan. You will be able to understand the advantages you get on the former loan.

Who can apply for a Home Loan Top-Up?

An existing home loan borrower who has continuously paid EMI may apply for a top-up at the present lender. However, even new customers who transfer their home loan to a new lender. So, you can check at your lender if you are eligible for a top-up or you can transfer your loan to another lender to get the benefit.

What is the processing fee on top-up?

A processing fee on a normal home loan is applicable on the top-up as well. So, it will also be variable from one lender to another. The fee generally ranges from 0.35% to 1% of the disbursed loan amount.

How can you apply for home loan top-up?

The process to apply for a home loan top-up is very simple. You can simply request your lender to provide you a certain amount over and above your existing home loan amount. If you have maintained a good repayment track record, you will get the approval for this facility and the disbursal really soon.