You can take a home loan to purchase, construct or repair a property or land. But when you need more funds up and over your existing home loan, a top-up home loan can be a good option.
You can get home loans up to Rs. 5 crores at attractive rates starting at 6.46% p.a. with the Navi app. The benefits you ask? – Paperless application process, lowest rates, flexible tenures, and super-fast processing! In case if you’re further short of funds, you can apply for a top-up on your home loan with Navi.
Competitive interest rates
Top-up housing loans either have rates similar to existing home loan rates or a few points higher than the original loan rates. Still, top-up home loan rates are lower than personal loan rates.
Depending on the lender, the repayment tenure of a top-up loan can extend between 10 and 20 years. It can also go as long as the repayment period of your current home loan. This is much longer than options like personal loans, car loans, or gold loans.
You can use this loan to meet various requirements. Some lenders may restrict the spending of this loan to housing purposes, but most don’t. So, you can utilise a top-up loan to fund your child’s education, wedding, medical expenses, etc.
High loan amount
Depending on the lender, the maximum top-up on a housing loan can vary. But the total balance usually does not exceed 70%-80% of the property’s value against which the original loan was taken.
Tax benefits on top-up loans are available, but only when this loan is taken for housing-related purposes. So, if you can prove through receipts and documents that the top-up loan you took was to purchase, construct or repair a residential property, you can claim tax benefits.
Section 80C and 24(b) prescribe the limitations to the tax benefits on Top-up loans. The maximum deduction available on interest payment of a loan taken for repairs and alterations of a self-occupied house is Rs. 30,000. But if it is for a rented property, then no limitation exists.
You can claim these two deductions only on the interest component of the loan.
Also read: How To Choose Banks/NBFCs For Home Loans?
Top-up home loans’ eligibility criteria depend on the lending institution. However, there are some common parameters like:
Every bank and housing finance companies have a different application process. The most common procedure is:
Top-up home loans are a great option for those in need of additional loans. Instead of paying a high-interest rate on a personal loan, one can get a top-up at the existing home loan interest rate. They can be availed on an urgent basis, and the approval process is fast.
The tax benefits one gets with top-up loans make it a favourable option. Also, you will have to pay a single combined EMI on the existing loan and its top-up.
Ans: The amount of Top-up loans given varies from one bank to another. But the balance cannot exceed 70%-80% of the property’s value. The loan amount can also vary depending on your credit score and bank statement.
Ans: Depending on the bank, the tenure decided to repay a top-up loan can vary. Usually, most banks allow repayment until the balance tenure of the existing loan or up to 20 years.
Ans: Section 80C and 24(b) prescribe the tax benefits on Top-up loans. But only when taken for housing-related purposes there will be a tax deduction on this loan.
Ans: As every lender offers Top-up loans at different interest rates, you may want to compare mortgage rates before deciding where to take a loan. Keep a note of the tenure of repayment decided by the bank and the maximum loan amount.
Ans: Any borrower who has an existing home loan can avail of a Top-up loan. If you have passed the home loan eligibility criteria, you will qualify for a top-up too. A proof of six-month clear repayment of the existing home loan will be required.
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