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Top Up on Home Loans in India

Top Up on Home Loans in India

Last Updated : April 29, 2020, 11:22 a.m.

It might sound strange to many that they can get funds for marriage, education or even medical emergencies with a home loan. But it’s true! An existing home loan has the facility of a top-up loan over it. Many lenders offer this facility to their borrowers and maintain a high level of customer retention and loyalty. While some lenders charge the same rate of interest as in the running home loan , others put a different rate, making it necessary to understand the modus operandi of the loan arrangement. You can thus read this post to understand the same. Let’s start by discussing the lenders that offer top-up home loans, the interest rates & processing fees they charge plus other formalities they carry out.

Lenders That Offer Top-up Home Loans in India

Below is a table showing the list of lenders and their offers with regards to top-up loans.

Lenders Interest Rate (In Per Annum) Maximum Loan Amount Available Processing Fee Prepayment Charges Maximum Loan Tenure
State Bank of India (SBI) 8.35%-10.55% Above INR 5 Crore 0.40% of the loan amount, subject to a maximum of INR 30,000, plus GST NIL Upto 30 Years
HDFC Limited 8.70%-9.20% Upto INR 50 Lakh
  • Salaried - 0.50% of the loan amount or INR 3,000, whichever is greater, plus GST
  • Self-employed - 1.50% of the loan amount or INR 4,500, whichever is greater, plus GST
  • Salaried - NIL
  • Self-employed - 2% of the outstanding balance plus taxes, statutory levies & charges if prepayment is made before six months of the loan disbursement date
  • After 6 months to 36 months, prepayment can be made only up to 25% of the outstanding principal every financial year, of the loan, without any fee
  • Any excess amount over the threshold 25% will attract 2% of the outstanding balance plus taxes
  • No charges post 36 months if the prepayment is made from own sources
Upto 15 Years
ICICI Bank 9.00% - 10.05% Upto INR 25 Lakh 0.50%-2.00% of the loan amount or INR 1,500 or INR 2,000 for Mumbai, Delhi and Bengaluru, whichever is greater, plus GST.
  • Floating rate loans - NIL
  • Fixed rate loans - 2%-4% of the principal outstanding plus GST
Upto 20 Years
Axis Bank 8.75% - 9.15% Upto INR 50 Lakh 1% of the loan amount, subject to a minimum of INR 10,000, plus GST NIL Till the time the existing home loan will run
Bank of Baroda 8.50% - 10.60% Upto INR 2 Crore 0.25% of the loan amount, subject to a maximum of INR 12,500, plus GST As Applicable It will depend on the income and repayment capacity of the individual
LIC Housing Finance (LIC HFL) 9.70%-10.00% Upto INR 5 Crore 0.25% of the loan amount plus GST As applicable Till the time the existing home loan will run

Note – The Goods and Services Tax (GST) is levied at 18%.

Who is Eligible to Avail Top-up Home Loan Facility?

Both salaried and self-employed having a running loan can apply for the same. Now, it depends on lenders how long the repayment track they want to check before approving the top-up loan. You can avail this loan at your existing lender or even at a new lender.

How Does the Top-up Home Loan Work?

The operational methodology of the top-up home loan will depend on the interest rate the lender charges on the same. If the lender charges the rate same as in the existing home loan, the top-up portion will get added to the existing outstanding loan balance. You will need to service the combined amount at the offered rate of interest. However, if the top-up loan rate differs from the running loan, both loans will have separate Equated Monthly Installments (EMIs) at different rates. You may get an intimation from the lender asking you to pay a combined EMI amount. As the floating rates will vary over time, the principal and interest component of the EMI in both running and top-up loans will change over time. However, the EMI amount will remain constant in both the cases.

Benefits of Top-up Home Loans

Formalities to Have on a Top-up Home Loan

The lender will send an expert panel to make a technical valuation of the property which must have been the case when you had applied for a home loan. The commonality between the two loans is the foundation i.e. the property. Additionally, there will be credit appraisals wherein the lender will see your existing loan payment track. If found excellent, the lender could put forth an attractive deal before you.

Documents Required

Formalities don’t end with technical valuation and credit appraisals, but continue with the document submission. You can check below the documents you need to submit while applying for the top-up home loan.

Identity Proof – PAN Card (Mandatory)/Voter ID/Passport/Driving License

Residence Proof – Voter ID/Passport/Driving License/Aadhaar Card

Income Proof (Salaried) – Salary slips for the last 3 months, bank statement for the last six months showing the credit of salary as well as the ongoing loan, latest Form 16 and Income Tax Return (ITR)

Income Proof (Self-employed) – ITR with income computation for the last 3 assessment years, balance sheet and profit & loss account statement for the last 3 years, current account statement of the business entity and savings account statement of the individual

Job Proof in case the current employment is below 1 year – Contract/Employment Letter

Property Documents – Title Deed, Property Chains, Flat Allotment Letter, Agreement of Sale

Passport size photographs, duly filled & signed Application Form

How to Apply for the Top-up Home Loan Online?

You can apply for the top-up home loan on the official website of the lender. Just provide your personal and income details correctly for the application to be processed smoothly. As soon as the lender receives your application, it will check the details and give an in-principle approval to it. After that, the lender will do the technical valuation of the property and make credit appraisals as stated earlier. Once everything goes smoothly, you will be given the final approval and the subsequent disbursal.

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