Everything You Need To Know About Top-up Home Loans

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There are many ways to borrow. But borrowing over an ongoing home loan is a much-overlooked option. A home loan top-up allows you to borrow through a home loan that yo’re currently repaying. There are several advantages of taking this option, and it allows you to access credit cheaply and without a lot of paperwork.

A home loan top-up extends a helping hand when funds are required for sudden financial needs such as marriage, buying a car, clearing off more expensive debts, or home renovation. It is a facility provided by banks, housing finance companies and other financial institutions.

A top-up loan is a convenient way to arrange for funds as you are not required to pledge additional collaterals. Its interest rates are lower compared to unsecured loans, and it comes with an extended repayment facility.

If you are facing a cash crunch, take a look at various features of top-up loan to avail instant money at low cost.

Features Of Top-up Home Loan

The top-up home loan size will depend on the value of your mortgaged property and your income. The sum of your original home loan and top-up home loan amount cannot exceed 70% of the market value of your property. However, do note that the terms and conditions of a top-up home loan will differ from one bank to another. Take a look at some of the aspects of top-up home loan that may work for you:

Low Interest Rates: The rate of interest under the top-up loan is usually much cheaper. You can easily get these loans at 9% to 12% interest. The processing fee charges range between 0.25% to 1% of the loan amount with a minimum and a maximum prescribed limit. Many lenders waive off the processing charges so it would be wise to check with your lender about the processing fees. 

Longer Repayment Tenure: A top-up home loan has a repayment tenure of up to 30 years. It usually comes with a longer tenure than a personal loan, a car loan or a gold loan. However, you should note that the bank fixes the tenure of your top-up home loan based on your income, the value of the property, your age and credit profile.  

Low EMI Amount: Lower interest rate and a longer repayment tenure bring down your equated monthly loan instalment or EMIs, reducing the strain on your pocket. A top-up loan is useful for a borrower who may find it tough to pay a huge EMI with an existing home loan.  

Tax Benefits: You can claim tax benefits if you utilise the top-up loan fund for buying a home or renovation of an existing home under Section 24 of the Income Tax Act against the interest paid. You must keep the important bills and supporting documents ready while planning to claim such a deduction.  

Quick Approval Of Application: Since you have already availed a home loan from the bank, your top-up loan application could be easily approved and the amount should is disbursed quickly. This is of course if you have been making timely EMI payments for your existing loan.

Now that you have gone through the benefits of this type of loan, you will be able to take a more informed decision. If you have decided to take a top-up home loan, you will need to check if you meet the eligibility requirements.

Eligibility Criteria for Top-up Home Loans

  • You should already have a home loan with the lender.
  • For the existing loan, you should have made timely and full payments over the past few months. A borrower in default will not be allowed a top-up loan.
  • You should have a high credit score.

Documents Required for Top-up Home Loans

You are usually not required to furnish any new document for a top-up loan as your lender already has your documents and the KYC process is done. However, in the case of a recently transferred or refinanced home loan, you may be required to submit documents to prove your track record of regular and timely payments on your home loan. Please note that at times, a few banks may ask you to submit documents once again to process your top-up home loan application. These documents pertain to your proof of identity, income, address etc.


A top-up loan is a great way to meet your short-term money needs. But sometimes you may find the loan amount to be low due to existing home loan. In such a case, you may explore other loan options to address your fund needs. You can also consider a top-up loan with overdraft facility with your lender as the interest rates are lower and much affordable.

BankBazaar.com is India’s leading online marketplace for loans and credit cards.

Need help in calculating your EMI? Use BankBazaar’s easy home loan EMI calculator.

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