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Top up home loan is the simplest source of finance available, if you are an existing home loan borrower and want to renovate your home. As the name suggests, it is a loan taken over and above your existing home loan, to carry out any modifications, extension or renovation in your home. To know the steps to avail a top-up home loan, it is imperative to understand its features and benefits, top up home loan eligibility criteria and the documents required.
Features and Benefits of Top-Up Home Loan
- High eligibility: With the use of online home loan emi calculators, you can check your top up home loan eligibility, subject to a maximum of 70-80 % of property value.
- No end use insisted: Top-up home loans are a type of personal loans where end use of funds is not insisted, unlike vehicle loans or home loans. You can utilize it for home renovation, purchase of electronic goods, jewelry, meeting medical expenses or even higher education.
- Long repayment term: Unlike personal loans, the top-up home loans can be repaid over a time horizon of 10-20 years, or the term may be coterminous with your existing home loan—which is a long time. The tenure of personal loans or gold loans is maximum of 5-7 years.
- Low-interest Rate: The home loan interest rates are the lowest in the market, and top-up home loans are offered at the same rates or only a few points above these rates. Since the interest rates of top up home loans are lesser than that of personal loans, gold loans or credit card loans, top up loans attract a lot of attention.
- Quick and hassle-free processing: Being an existing home loan borrower, you already have a credit relationship with the bank. Hence, processing, sanctioning and disbursement of home loan top up loans is done speedily due to the comfort given to the lenders by your existing credit history.
- Tax Benefits: You can claim tax deductions if the top up home loan is used for the modification of your home, or even for bearing the expenditure of education purposes..
Top up Home loan Eligibility Criteria
Here are some of the eligibility criteria to apply for a top-up home loan:
- You are an existing home loan borrower of the bank.
- You have a good credit score.
- There is a valid mortgage available with the bank.
Documents Required for Top up Loan
When you approach a bank for a home loan, you already submit the following documents to know of your home loan eligibility:
- Copy of identity proof
- Copy of Address proof
- Income proof
- Property papers
- Proof of business
- Bank account statements
Based on these, your eligibility is assessed and you are sanctioned a home loan. Subsequently, when you apply for a top up home loan, you may only be asked to submit the latest bank account statements and salary slips. So, once you decide upon availing a top up home loan, make sure you scout through the online resources, make use of online home loan emi calculators, check your top up home loan eligibility, and then submit your documents.
To conclude, a top up home loan should be availed judiciously like any other loan. Some banks have a higher rate of interest for these loans, and may be a drain on your savings, if you do not need it. Hence, need assessment should be done carefully, so that there is no depletion of your savings for monthly repayment. Nonetheless, top up loans are a quick source of finance, with the flexibility of utilization.
