Exploring the Benefits of Home Loan Top-Up

People might face urgent monetary needs that are outside of home-related expenses while repaying an existing housing loan. In such situations, going for an additional personal loan to fulfil their financial requirements can become expensive and difficult to manage. This makes a home loan top-up the preferred option for borrowers that open their doors to exploring different benefits. 

What are the benefits of home loan top-up?

Following are some of the notable benefits that borrowers can avail on applying for a home loan top-up:

  • Immediate source of funds: Since the lender has already verified the documents of the borrower during the application for a housing loan, it takes less time for them to repeat the process. Thus, applicants can expect instant approval of their top-up loan
  • Easy loan repayment: Along with an additional amount, borrowers also get extra time to repay their credit. This offers them flexibility to select a new tenor to repay the remaining loan amount. To decide on an appropriate tenor for repaying the increased credit amount, one can use a housing loan EMI calculator.
  • Lower interest rates: The interest rate for a housing loan top starts at 9.80%. This is much lower compared to personal loans. Hence, people with an urgent need of funds can go for a home loan top-up, rather than taking a personal loan for the same purpose.
  • Simple eligibility criteria: There are no such stringent criteria that creditors set for home loan top-up. Thus, applicants can easily fulfil the housing loan eligibility criteria to refinance their home loan and top it up for meeting their immediate fund needs. 
  • No end-use restrictions: The best part about the loan top-up is that there is no restriction on the use of the top-up loan amount. Also, it is not mandatory to disclose the reason for getting a top-up. One can use this money for purposes like home renovation, covering medical costs, closing existing unsecured debts, and so on.
  • No collateral needed: Home loan top-up applicants will not have to additionally collateralise any property or jewellery. This saves time and fewer documents are required during the application process. 
  • Easy application process: The application process is easy and completely online. Applicants can complete the entire thing with just a few clicks. This allows them to apply at any convenient time.
  • Sumptuous loan amount: Applicants can get Rs.1 crore or more as a loan top-up based on their eligibility. To determine the maximum amount available as top-up, individuals can use an eligibility calculator. 
  • Easy paperwork: Borrowers need to submit only a few documents when applying for a top-up loan. This minimises the chance of errors as well as hastens the credit approval process. 

Apart from the above-mentioned benefits, individuals can also claim tax benefits on top-up loans under various Sections of the Income Tax Act. 

What are the tax benefits available on home loan top-ups?

There are several home loan tax benefits that people can claim when they go for top-up loans. These include:

  • Section 24: This deduction of Rs.2 lakh is available on the interest paid on the top-up loans.
  • Section 80C: According to this, one can get a deduction of up to Rs.1.5 lakh during the repayment of principal.
  • Section 80EE: This is an additional deduction of Rs.50,000 that first-time homebuyers can claim when applying for a top-up.

These tax benefits on top up loan allow individuals to save sumptuously during credit repayment. However, borrowers should note that they can claim these benefits only when they invest the top-up amount towards home improvement. Apart from these, one should be aware of the interest rates and associated charges. 

What are the interest rates and charges for a top-up loan?

The top-up rate for floating interests on housing loans varies with the profession of an applicant. These are as follows:

  • For salaried individuals: Between 9.80% and 18.00%
  • For self-employed individuals: Between 10.00% and 18.00%

To enjoy the benefits of lower interest rates and unrestricted use, individuals can apply for a top-up loan to cover immediate fund needs. However, to avail a top-up facility, it is mandatory to have a housing loan first. There are some criteria that one needs to fulfil for getting a home loan.

What are the eligibility criteria required for availing a housing loan?

Borrowers planning to opt for this credit type must fulfil the home loan eligibility criteria. These are as follows:

  • One should have Indian citizenship.
  • Age must be between 23 and 62 years for salaried individuals and 25 and 70 years for self-employed people.
  • Salaried individuals must have a minimum of three years of work experience in a reputed company.
  • Self-employed people should have at least five years of vintage in the current enterprise.
  • Applicants must stay in the city where the financial institution operates. 

Besides knowing the eligibility criteria, one must also know about the documents that they will need to upload when applying. This way they can ensure a smooth and error-free application process for top-up loans. 

What are the documents required for availing a home loan?

The list of documents required for a housing loan is short. Hence, applicants will not have to invest a lot of time in arranging them. The important papers include:

  • KYC documents such as Aadhaar card, PAN card, and Voter ID card.
  • Qualification certificate for self-employed people.
  • Property papers such as title deeds, allotment letters, tax receipts and so on. 

After knowing the benefits, interest rates, eligibility criteria and documents required, people can proceed with their application. 

What are the steps to apply for a top-up loan?

Individuals can go for online applications when they desire to get a top-up on their home loan. The steps for online application are as follows.

Step 1: Navigate to the home loan page of the financial institution.

Step 2: Click on the “Apply Now” button to view the application form.

Step 3: Enter name, credit amount, repayment tenor and other necessary details.

Step 4: Input the OTP to verify the entered details. 

Step 5: Upload the necessary documents.

Step 6: Review the inputs and click on the “Submit” button. 

Several top-rated financial institutions provide pre-approved offers on products like home loan and loan against property. Existing borrowers can opt for them to hasten their credit approval process. To check this offer, they can navigate to the official website of the financial institution and enter their name and contact details.

On getting a home loan top-up when opting for a balance transfer, borrowers get access to multiple benefits. These include lower interest rates, longer repayment tenor, increased loan amount and affordable EMIs.

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