Existing home loan borrowers can opt for Home Loan Top-Up facility to meet additional expenses related to home improvement/extension, home construction, purchase of a new house or taking care of any personal needs (except for speculative purposes). Home loan borrowers are not required to furnish additional security or collateral, apart from the one provided for their existing home loan, for availing top-up home loans. Borrowers have the flexibility to avail home loan top-up either from their existing lender or from another lender through the home loan balance transfer process. Here are some of the main features offered by lenders to home loan borrowers availing the top-up facility.
The rates of interest offered by lenders under the home loan top-up facility is similar to or slightly higher than home loans in most cases. Top-Up home loan interest rates are also usually lower than the personal loan interest rates offered by the same lender. As lower interest rates lead to lower EMIs and total interest costs, individuals availing top-up home loans can save more on interest costs while reducing their repayment burden when compared to those availing personal loans. Home loan lenders usually set the interest rates for their top-up facility based on several factors including the borrower’s credit scores, repayment history, etc. Therefore, existing borrowers requiring funds for personal or business usage can opt for top-up home loans. The interest rates of some of top lenders offering both home loan top-up and personal loans are as follows:
|Lender||Top-Up Home Loan Interest Rates||Personal Loan Interest Rates|
|IDFC First Bank||8.85% p.a. onwards||10.49% p.a. onwards|
|Axis Bank||9.00% – 13.30% p.a.||10.49% p.a. onwards|
|Bank of Baroda||10% p.a.||10.90% – 18.25% p.a.|
|SBI||8.90% – 10.45% p.a.||11.00% – 15.50% p.a.|
|Bank of Maharashtra||8.80% – 11.25% p.a.||10.00% – 12.80% p.a.|
|Bank of India||8.45% – 10.65% p.a.||10.25% – 14.75% p.a.|
|Punjab and Sind Bank||9.30% – 10.40% p.a.||11.15% – 12.75% p.a.|
|UCO Bank||10.05% p.a.||12.45% – 12.85% p.a.|
|Canara Bank||9.80% – 11.85% p.a.||10.65% – 15.65% p.a.|
|Indian Overseas Bank||11.65% – 12.10% p.a.||12.50% – 13.50% p.a.|
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No End Usage Restriction
Home loan borrowers can avail top-up home loans various purposes like home renovation/extension of the residential unit for which he/she had availed the housing loan, purchase of residential property, home construction or for meeting personal expenses (except for speculative activities) related to marriage, education, medical emergencies, travel, etc. Although personal loans has similar flexibility in terms of end usage, existing home loan borrowers opting for home loan top-up will have to pay lower interest costs when compared to personal loans.
The repayment period for top-up home loans usually goes up to 15 years, with some lenders offering loan tenures of 20 or even 30 years. The loan tenures for top-up home loans are usually higher than that of personal loans, which enables borrowers to select longer repayment periods for paying off their loans. Although selecting longer tenures enables home loan borrowers to reduce their EMIs, it may end up in increasing the total interest costs, which will consequently inflate their overall repayment burden.
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Home loan lenders offering top-up home loans usually offer loan amounts of up to Rs 1 crore, with some lenders offering higher loan amounts. Some lenders may also specify that the borrower can avail home loan top-up for up to 100% of their sanctioned home loan amount. Moreover, lenders can offer loan amounts up to 90% of the property’s value based on the total loan amount (sum of original home loan and home loan top-up) and credit profiles of their loan applicants. The borrower has to arrange the remaining amount from his/her own resources in the form of down payment or margin contribution. The proportion of the property’s value financed through home loan is also known as home loan LTV ratio. The LTV ratio for home loans of up to Rs 30 lakh can go up to 90% of total property’s value and those availing loans between Rs 30 lakh to Rs 75 lakh can get up to 80% of the total property’s value as home loan. The LTV ratio for home loans above Rs 75 lakh can go up to 75% the property’s value.
The eligibility criteria for availing home loan top-up may differ from lender to lender. However, most lenders offering top-up on home loans, both to their existing home loan customers or new customers transferring their home loans from another lender, consider factors like their borrower’s income, age, credit score, residential status, age of property at loan maturity, etc. Some lenders also specify that existing home loan customers are eligible for availing top-up home loans only if they have a clear repayment track record of minimum 1 year. Lenders may also stipulate that home loan borrowers who have defaulted on their EMI while repaying their home loans should resolve the issue before their next EMI is due.
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