Owning a home is a dream which is common to every common people, and Home loan is the best option for you to make your dream come true by purchasing a house. This fact is known to each and every one of us I guess and in our previous blogs we have provided you a proper guide to home loan. In this blog we are going to make you know about Home loan Top-ups and their benefits.
Home loans always comes with a liability but most of us go happily for this liability as owning a home comes with lots of happiness and secures our future Financially. But are you aware of the Fact that on your home loan you can avail additional top- up. These top-ups loans depends on your loan amount. Most of the top-ups have a tenor period of 15 to 20 years are given only to the pre-existing customers.
Suppose you already have a home loan of 20 lakhs for a tenor period of 15 years on you which is going from last 4 years and you suddenly feel the need to renovate your home. In this case if you don’t have the required fund for the renovation you will go for a personal loan. But here is a better option for you in this situation. You can go to the lender with whom you have your Home loan and you can ask for a top-up on you home loan.
What is a Top-Up Loan?
Top-up loans are exclusive offer which are provided to a person who is already having a home loan. This loan can be availed over and above your home loan. That is also the reason why it is called as a top-up loan. You can use this loan for the renovation purpose of your house, extension etc.
Benefits of Top-Up on Home Loans
- One of the biggest benefit of top- up home loan is that you can use this loan for your personal needs as well such as for education of your children, to furnish your home, business requirements and for marriage purpose as well. So it’s a better option for those who have an existing home loan.
- The interest rate of a top-up home loan is comparatively low than other loans such as personal loan, credit card loan.
- Top-up home loans provides you tax benefit. But the tax benefit can only be availed only if you use this loan for you home.
- The tenor period of the top up loan is more as compared to personal loan, credit card loan and gold loan.
- Top-up loans can be availed in an easier and hassle free way as the lenders already have all the information and documents with them because of your home loan.
Eligibility to avail Top-up on Home Loan
- You should have an already existing home loan with bank.
- You should have a good repayment history regarding your home loan.
- There should be a mortgage on the name of the Bank.
Salient Features of Home Loan Top-Up
Top-up home loans are available at the same interest rate as Home loan which is lower than the interest rate of personal loan. The rates differs with points from bank to bank. In case of SBI- it offers home loan at an interest rate of 9.4% p.a. whereas top-up home loans are available at an interest rate of 9.5% p.a.
The tenor period of a top-up home loan is a maximum of 20 years or it can be same as that of your home loan tenor period. The tenor period depends on many thing such as banks policy, applicant’s age, salary and home loan amount. The top- up loan amount also varies from bank to bank.
One of the biggest feature of top-up home loan is that it can be used for multiple purposes from personal need like children’s marriage to the home renovation or extension which is its actual purpose.
Terms and Conditions for Home Loan Top-ups
The most important thing required to have a top-up home loan is you should first have a home loan with any Bank or NBFC. You can get a home loan top-up only after few months or years of repayments of your home loan. This also vary from bank to bank. Generally it vary from 6 to 12 months repayments.
Generally your top-up loan amount depends on the net worth of your property. Loan amount can be 70 to 75% of the current worth of your property less the outstanding amount of your home loan. For example if the current market value of your property is 70 lakhs and the outstanding amount is 20 lakhs then in this case you can get a top-up loan of 20 to 25 lakhs. No additional security is required for this loan as you have already provided security and collateral for your home loan.
The tenor period of this loan can be a maximum of 15 to 20 years but it is directly dependent on tenor of our outstanding amount. Suppose 10 years is remaining tenor for your home loan so the tenor of your top-up loan can also not exceed 10 years.
Is having a Home Loan enough to get a Top-up loan?
Many of you may think that if you availed a home loan then you are eligible to have a home loan top-up. But this is the basis thing which is required to avail a home loan top-up. In addition of this the Bank will see your repaying ability and your previous repayments. If you were good and timely regarding your previous repayments for your home loan than you can get the top-up home loans easily. However your top-up loan processing can be faster as compared to other loans as you have a pre-existing relationship with the bank and they have all your required documents and records. However the final decision is always of the lender.
Home loan top-ups are the better alternative available when you already have a home loan and you are in need of a loan even for a personal reason. The interest rate of this loan is always lower than the personal loan and the tenor period is even more.