Top-up home loan in India

Posted by Shreekant Rao on January 31st, 2017

What is a home loan top up?

Top-up loans are grand option for individuals who have already taken a personal loan but need additional funds for any reason whatever. There are numerous benefits of taking a top-up loan, starting with a low rate of interest in comparison with personal loans.

It is mainly allows you to avail a loan amount on top of your home loan. The normal loan tenure is about 10 years and is often offered only after a few years into the home loan disbursal, as this gives a good idea about your repayment track record, which means no default down the line and this also increases your loan eligibility.

What is covered under home loan top ups?

One can avail top-up for purposes like kid education, vacation, debt repayment, car and personal loan pay off, medical emergencies, vehicle purchase, marriage of your child, home improvements and buying commercial property , etc.

Home Loan top-up is flexible for applicant’s needs and different from home furnishing/interior loans.

What are the eligibility considerations for top up loan?

They are as follow:

    1. The customer must have taken a home loan from the bank it approaches for a top-up loan.

    2. Top-up loans can only be acquired after 6 to 12 months or after a preset number of years of repayment record so   far as the home loan is concerned. Some banks may also have additional conditions with regards to   possession or completion of the house prior to sanctioning a top-up loan.

     3. The acceptable amount on a top-up loan is 80% to 85% of the property’s current market value. Hence, if the property value is Rs. 60 lacs and Rs. 30 lacs is the amount outstanding on your home loan, the top-up loan amount (Calculate Home Loan emi) that can be availed is 15 lacs to 18 lacs.

     4. Some banks have a condition where in the outstanding home loan amount and the amount availed through the  top-up loan cannot exceed the initial home loan amount availed. In this case, the maximum amount that can be borrowed through a top-up loan is Rs. 5 lacs if the outstanding loan amount is Rs. 35 lacs and the original sanction amount is Rs. 40 lacs.

     5. The initial home loan outstanding tenure is usually the tenure of the top-up loan. For example, if there are 10 years remaining on the home loan, the top-up loan’s tenure cannot be more than 10 years.

[Source: http://blog.regrob.com/top-up-home-loan-in-india/]