Home loans simplify the process of buying a home. They also make it easier for people to buy their dream homes and then pay for them easily through affordable home loan EMIs. Online tools, such as the home loan prepayment calculator and home loan EMI calculator, make loan repayment planning easy while also minimizing the chances of a loan default. However, buying and maintaining a home isn’t easy. The move-in process requires one to spend money and so do interiors and buying furniture. You will also need to undertake upkeep and refurbishment projects from time to time. While these projects will keep your home looking new and beautiful, they will also require you to spend money. A home loan top-up could be the answer to many of your problems. 

A home loan top-up is a type of second home loan availed of against your home’s equity. Individuals who are currently repaying their home loan can avail of a second home loan against their home. This loan is known as the home loan top-ups and individuals currently repaying their home loans can request these loans from their current lender or another lender if they decide to opt for a home loan balance transfer with them. 

While anyone repaying a home loan can apply for a top-up loan, individuals get approved for these loans only if they meet the top-up loan eligibility criteria, which generally revolve around age, credit score and repayment track record. To start with, most lenders require loan borrowers to be between the ages of 23 and 70 and be residing citizens of India. They must have a clean repayment track record, with no more than one case of a missed EMI. Further, they must have cleared the missed EMI before the next due date. Most importantly, they must at least have a CIBIL score of 750 or above. 

If you qualify for a top-up loan and need money, you should go ahead and make an application. Top-up loans on home loans offer many wonderful features and benefits. The next section of this article discusses these features and benefits in detail. 

Top-Up Loans on Home Loans: Features and Benefits

Simple Documentation Requirements 

Borrowers borrow top-up loans generally from lenders with whom they already have a home loan account. While applying for a home loan, the borrower must already have submitted all the home loan documents. Therefore, when it comes to top-up loans, lenders generally do not ask for too many additional documents. This not only makes the process of applying for a home loan easy but also reduces the loan processing and disbursal timing. As opposed to other loans, such as a home loan or personal loan, the processing and disbursal time for top-up loans on home loans is actually quite low. 

Nominal Rate of Interest 

Yet another advantage of a home loan top-up is that these loans attract a very nominal rate of interest. If you have the right credit profile, you can even negotiate for a low home loan interest rate. In general, loan borrowers are expected to pay an interest rate of only a per cent or two higher than what they are currently repaying on their home loan. 

Long and Flexible Loan Repayment Tenor 

The top-up loan tenor cannot exceed your home loan tenor. However, since most borrowers choose to repay their home loans over a period extending up to 30 years, the loan tenure for top-up loans is also quite long, which further makes the process of loan repayment easy. 

Zero End-Use Restrictions 

Yet another benefit of a top-up loan on a home loan is that top-up loans come with zero end-use restrictions. Borrowers can use the loan money however they like. They can use the funds to buy another property, undertake repair work on their current one, pay for their child’s education or even take a trip abroad. 

Home Loan Tax Benefits 

Lastly, top-up loans on home loans can make loan borrowers eligible for additional tax benefits, depending on how they use the loan money. So, before applying for a top-up loan on home loans, borrowers must talk to a home loan tax expert about the home loan tax benefits they may be eligible for. 

Final Words 

A top-up loan on your home loan can make your life simple. However, the top-up loan will also add to your EMI burden. Therefore, before availing yourself of a top-up loan, use a home loan EMI calculator to see how your EMIs will change and if you can afford your new EMIs. Further, use a home loan prepayment calculator to plan your repayment journey and become debt-free as quickly as possible. The top-up home loan process is fairly easy. So, one need not worry about the application process at all.