Top-up Loans and its Benefits

When you require additional funds, loans taken on top of your existing home loan can be a great choice. Learn about the features of such loans and their several advantages in this post.

Banks and NBFCs (Non-Banking Financial Companies) offer top-up loans to customers over and above their home loan to finance their various expenses. Since the customer has an established relationship with the lending agency, these loans are easy to get than applying for a new loan. If your current lender/bank does not offer top-up home loans, you can transfer your loan to another lender/bank. But before you transfer the loan, it is advisable that you check with the new lender if they provide a top-up loan.


To avail a top-up home loan, you need to satisfy the following conditions:

●    You must have availed a home loan from the bank

●    At least 12 months must have passed since your current home loan was disbursed.

Benefits of Top-up Home Loan

Affordable Interest Rate

Whether you want to buy a car or pay for medical expenses, top-up home loans can be the best option to avail the funds at a low interest rate. The interest rates are generally comparable to home loan interest rates and are much lower than unsecured loans like a personal loan. Generally, the top-up loan interest rates are about 0.5% to 1% higher than home loan interest rates, it is still much lower than the personal loan that has an interest rate of 12% to 15%. If you have a good relationship with the existing lender, and have been diligent with your repayments, they might also offer the same interest rate as that of your existing home loan.

Loan Tenure

Top up housing loans, generally, have long tenures of about 10 to 15years. The maximum tenure would depend on the remaining tenure of your primary loan. Your other monthly debts and liabilities will also play a part in determining the loan tenure. Since the tenures are generally longer than personal or gold loans, it gives you plenty of time to repay the loan.

No Restriction on Usage

Top-up loans can be used for diverse financial needs like funding higher education or for paying off your other debts. The banks do not stipulate the purposes of usage, like in the case of car loans or education loans. This freedom of usage allows you to avail the loans to meet any of your financial needs except for speculative purposes.

The liberty to use the funds available for your personal or professional requirements is the major advantage of top-up home loans. Additionally, the familiarity of the lending institution’s procedures due to your existing relationship with the bank can also help in simplifying the process of the loan application.