What is a Top up Loan and How to Apply for it?
Understanding Top Up Loan
A top up loan is an additional fund that you can avail above your existing loan. Instead of taking out a second loan, you can just go for a top up loan. A top up loan is also considered as a personal or cash loan and it can be availed to meet different financial purpose such as, renovating your home, medical emergencies, children’s education, etc.
But what is the interest rate of a top-up loan? And, how to apply for it? Read on to know all the details.
Features of Top up Loan
The features of top loans are given below:
1. Multi-purpose Use
You can use top-up loans to fulfil any need. For example, you can use this for personal requirements, medical expenses, education fees, etc.
2. High Quantity Loan Amount
Top-up Loans provide a sizeable loan amount to cover your needs.
3. Flexible Repayment Tenure
Top-up loans come with a flexible tenure for repayment. For example, you can repay them in 10 or 20 years or until the balance of ongoing loan tenure.
4. High-interest Rate
Top-up loans have higher interest rates as compared to interest rates of home loans. Nevertheless, these are cheaper than personal loan interest rates. This enables borrowers to pay.
Benefits of Top up Loan
This list highlights some of the benefits of top-up loans:
1. Easy-to-meet Eligibility
Top-up loans have easy-to-meet eligibility criteria. According to this, any borrower with an ongoing loan already paid sufficient EMI is eligible for top-up loans.
2. Minimal Documentation
Borrowers only need to present primary documents like bank account statements and salary slips.
3. Fast Approval
With easy-to-meet eligibility and less documentation facility, top-up loans get approved instantly.
4. Easy Online Process
Applying for a top-up loan is simple and hassle-free with their online application process.
5. Overdraft Facility
Some lenders often offer overdraft facilities to borrowers. This enables them to pay interest only on the amount borrowers withdraw from a pre-sanctioned loan limit. Therefore, borrowers can enjoy easy withdrawals and repay them at convenience.
6. Transparent Procedure
Top-up loan sanctioning follows a transparent process with no hidden charges. One can know about all applicable charges before applying for a top-up loan.
How to Apply for a Top up Loan?
Follow the given steps to apply for a top-up loan from your existing lender:
- Connect with your existing lender to know whether they offer a top-up personal loan
- In case your existing lender does not provide a top-up, you can shift your loan to another lender by opting for a balance transfer
- After getting details from a lender, fill out the online application form
- Submit the necessary documents
- On approval, you will receive the top-up amount in your bank account
Also Read
Eligibility Criteria
- CIBIL Score – A good credit score (750 and above) enables an individual to reduce repayment burden and obtain the best deals from the lenders.
- Income – One must possess a stable source of income whether salaried or self-employed
- Repayment Record – A good loan repayment record can increase the chances of getting approvals easily. Whether you have an existing home loan or personal loan, pay the EMIs on time to be eligible.
- Existing Loan – You must have an existing loan to secure a top-up loan
Documents Required for Top up Loan
- Employee ID Card
- Aadhaar card, PAN card, passport or voter ID card
- Salary slips
- Bank account statement
Interest Rates by Banks and NBFCs on Top up Loan
Top-up loan interest rates from different banks and NBFCs are provided below:
| Banks and NBFCs | Interest Rate |
| HDFC’s Top Up Loan | 9.00%-9.50% |
| Union Home Loan Top Up | 7.15%-7.45% |
| Maha Bank Home loan Top up | 8.00%-9.50% |
| Baroda Home Loan Top Up | 9.30%-11.15% |
| Axis Top Up Home Loan | 9.90%-3.35% |
| Citibank’s Top Up Your Home Loan | 7.40%-7.50% |
| SBI Home Top Up Loan | 8.95%-9.45% |
Who can Apply for Top up Loan?
If you have an existing personal or home loan, you can apply for a top-up loan to meet your financial needs. However, you must check your credit score and the top-up loan interest rates. Because there’s no restriction on usage, you can use the fund to meet other expenses as well. However, you must repay the loan EMIs on time to prevent your credit score from falling below 750. This will assure your credibility as a borrower to the lender.
Final Word
Top-up loans provide much-needed relief to existing borrowers if they overstretch their estimated spending limits. Since personal loans are more expensive, a top-up loan can reduce the financial burden. It is a great option if you are looking to avail yourself of restriction-free end-usage funds. If you want to opt for a hassle-free home loan or Instant Personal loan at competitive interest rates, download the Navi App and apply now!
FAQs
Ans: Yes, you can avail income tax deduction of up to Rs. 2 lakh on a top up loan interest under Section 24 of the Income Tax Act.
Yes, several lenders offer foreclosure facilities to repay the loan amount before the end of tenure.
The documents required for a top up personal loan are:
1. Identity proof such as Aadhaar
2. Proof of address (Passport, utility bill, etc.)
3. Income proof
4. Previous 3 months’ bank statements
5. Salary slips for the last 3 months
6. Passport size photograph
You cannot take a top up loan from another bank. To do so, you must transfer the existing loan to another bank first.
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