Home Loan Top Up: Interest Rates, Eligibility, Tax Benefits

Home Loan Top Up

Home Loans Made Easy!

Home » Articles » Home Loan Top Up

Home Loan Top-Up

In this day and age, when property prices are increasing, most people choose a home loan to purchase their ideal home. However, it is common for the house loan amount to be insufficient to cover additional extra. These extra charges can be registration fees, interior decoration, renovation costs, or property maintenance costs. Top-up loans come in handy in these situations. Home loan top up is a sort of financial assistance offered by banks and financial organizations that enables borrowers to obtain credit in addition to their principal home loan.

What is Home Loan Top Up?

A home loan top up is an additional loan amount that a borrower can obtain in addition to their current house loan. The maximum loan amount and tenure allowed under the top-up loan product differ by lender. Customers have the option of obtaining a top-up loan from their current lender or a different lender via a balance transfer.

Features and Benefits of Home Loan Top-Up

Some of the features and benefits of Home Loan Top Up are as follows:

  • Longer-Term: When compared to a personal loan, repayment of the borrowed amount is easier with a top up, with payback tenure extending up to 20 years.
  • Lower Interest Rate: The interest rate offered by a house loan is much lower than the interest rate offered by a personal loan. As a result, in the event of an emergency, it is preferable to choose a house loan top-up. Let us compare the rates of some of the most prominent institutions.
  • Larger Loan Amount: The banking institution offers the option to obtain a higher loan amount of up to Rs. 50 lakhs through top up. Don’t exceed the bank’s limit! Make sure the total of your top-up loan and existing house loan doesn’t exceed their bank’s policy restrictions.
  • There’s no need for security: No additional security is required as top-up loan is sanctioned on existing housing loan.
  • Fulfill Various requirements: Top-up loans can be utilized for a variety of purposes. This can include meeting expenses for a wedding, education, business, house renovation/construction, and so on.
  • Quick Processing: Obtaining a top-up takes little time because there is no additional background check or documentation necessary for processing.

What are the Tax Benefits of Home Loan Top Up?

Give your wallet a boost! Renovating, expanding, constructing, or repairing your residential property with a top-up loan could put a smile on your face. Also, it will help you with tax benefits. In the case of a self-occupied home, a tax deduction of up to 30,000 on the top-up home loan is available. There is limitation on the deduction that can be taken if the loan was used to support a rental property. The deductions are part of the overall tax deduction slab of 2 lakhs per year for the house loan interest component.

If the top-up loan is utilized to buy or build a new home, both the principal and interest components are tax-deductible under Sections 80C and 24(b). However, if the funds are utilized for residential property renovation, alteration, or repair, the deduction can only be claimed for the interest component.

Please keep in mind that tax benefits can only be claimed if the receipts and papers for the work are kept up to date. You should also present these at the time of claim.

What are the Eligibility Criteria for Home Loan Top Up?

The qualifying criteria for the home top-up loan will be the same as the requirements for the house loan of the bank from whom you are requesting or have previously obtained a home loan. This varies from bank to bank. However, the following are some critical considerations to remember:

  • In the previous year, there should have been no more than one EMI bounce.
  • If an EMI bounced, it should be resolved before the next EMI is due.
  • Clear your existing home loan before the clock strikes six months! Full repayment is non-negotiable.
  • One year of clear repayment history is required for top-up loans combined with balance transfer home loans from other banks.

The general criteria, which are the same as for home loans, are as follows. However, this may differ from bank to bank.

  • Age range: 21 to 65 years
  • Resident Indian or Non-Resident Indian nationality
  • Individuals who are salaried or self-employed

Repaying The Top Up

After taking into consideration your present loan balance and the top-up at their respective interest rates, a new EMI amount will be determined.

If you combine a top up with a home loan balance transfer, your new EMI amount will be determined by whether you are extending the term of your loan. Transferring the loan opens the door to resuming regular monthly payments based on the new EMI amount.

How to Apply for a Home Loan Top Up?

Applying for a top-up home loan is a simple process. You have a choice between the two methods listed below:

  • Directly apply for the top-up loan at the nearest HomeFirst branch where you currently have a home loan account.
  • Log in to HomeFirst’s website and fill out an online application for a top-up home loan. Simply submit your contact information, and our representative will call you.

Factors to Consider When Evaluating a Top-Up Lender

If you apply for a top-up loan from your existing home loan lender, it may be offered at a higher or lower interest rate than for existing clients, depending on the bank. Compare the interest rates on top-up loans at your bank. It can be different for existing and new customers. Do your homework on this.

Some banks provide existing clients with a lengthier tenure or the balance of their house loan tenure, but others provide a limited tenure that is significantly less than the remainder of their home loan tenure.

Some banks provide existing customers a top-up house loan up to a certain amount, while others do not, so choose the proper bank based on your financial needs.

Top-up loans can be returned without penalty regardless of which lender you use.

Share this article on WhatsApp

Let us lend you helping hand in making your dream come true.

Apply for a Home Loan online
& get instant approval

Interest rates and other charges depend on the products. Please refer to the individual product pages for the rates.

Your home loan will be processed in 2 steps:

  1. You receive the approval of your home loan.
  2. You sign the loan agreement papers and complete other necessary documentation. The loan amount is thereafter paid directly to the builder by Home First Finance Company.

Loan decisions are made in less than a week. You will receive an SMS on your registered mobile number as soon as we make a decision.

HomeFirst does not charge any prepayment fees. This applies to both partial and full repayments. In fact, we have a special Auto-Prepay feature to facilitate this process for you.

HomeFirst offers loan tenures between 1 year to 25 years. If you opt for a longer tenure, you can get the advantage of a lower EMI each month.

HomeFirst can provide finance up to 90% of the property value. The balance has to be arranged by you from other sources. Please note: 90% financing is only available for loans amounting to less than Rs. 30 lakhs.

All co-owners of the property have to be co-applicants to the loan. A person who is not a co-owner can also become a co-applicant to the loan.

During the construction phase, HomeFirst will disburse funds to the builder on your behalf. These will be based on payment requests made by the builder as per the construction schedule.

HomeFirst will charge interest only on the amount disbursed as loan during the construction phase. In this period, interest is charged only on the disbursed loan amount. For example, if you have a sanctioned loan of Rs 10 lakhs, but the property is under construction and we have disbursed only Rs 4 lakhs, you will be charged interest only on 4 lakhs. These interest payments are referred to as pre-EMI interest payments.

EMI payments will start only after completion of the project and registration of the property.

All cheques to HomeFirst should be written out in favor of ‘Home First Finance Company India Limited’.

In the event of an unfortunate incident, home loan insurance will help you or your family pay off the home loan. This ensures that the burden does not suddenly fall upon family members at a bad time.

Send us your resume on careers@homefirstindia.com with the position you are applying for in the subject line.