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

Advantages of Home Loan Top-Up over Personal Loan


  • Advantages of a home loan top-up over a personal loan.
  • Comparison between a personal loan and top-up home loan.

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
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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.

AdvantagesParametersHome Loan Top-UpPersonal Loan
1Interest RateInterest rate on a home loan top-up is much lower than a personal loan. At present, the facility is available at 7.50% per annum onwardsAt present, the lowest interest rate available for a personal loan is 10.75% per annum
2TenureThe maximum tenure can be as high as of the home loan 30 yearsThe loan can be taken for a maximum tenure of 5 years
3Loan AmountDepends on the outstanding balance of the existing home loan subject to LTV ratioYou can get up to 40 lakhs loan amount at most of the lenders
4Processing Fee0.35% to 1% of the loan amount plus GSTThe processing fee ranges from 0.99% to 2.50% of the loan amount
5Approval TimeInstant for existing home loan customers The approval time is generally 3-5 days
6Eligibility CriteriaAn existing home loan borrower as well as the one who transfers the loan to another bank.Both salaried and self-employed can apply for this loan
7Approval CriteriaKeeping into account the repayment history, property value and outstanding loan amountBased on income, age, credit history and employer category
8Tax BenefitIf you use the money for home renovation or extension, you can get tax exemptionThere is no tax benefit on an unsecured personal loan
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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.

  • Home Loan Interest Rates March 2024
    Axis Bank8.75% - 9.15%
    Bank of Baroda8.50% - 10.60%
    Citibank8.75% - 9.15%
    HDFC8.50% - 9.40%
    ICICI Bank9.00% - 9.85%
    Indiabulls Housing Finance Limited8.65%
    Kotak Bank8.70%
    LIC Housing8.50% - 10.50%
    Piramal Capital & Housing Finance10.50%
    PNB Housing Finance8.50% - 10.95%
    Reliance Home Finance8.75% - 14.00%
    State Bank of India/SBI9.10% - 9.65%
    Tata Capital8.95% - 12.00%
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