InvestorQ : What are the top features of top-up loans?
Ashoka Patkar made post

What are the top features of top-up loans?

Karim Sahu answered.
3 years ago

A top up top-up loan is when you take an additional loan from a bank that has already lent to you. So, if you already have a home loan with a bank and you have been making regular repayments, then you can apply to the same bank for a top-up loan.

Many banks, private and nationalized, apart from non-banking financial companies (NBFCs) offer top-up home loans to their existing customers.

A few important features of top-up loans are:

- You can take a top-up loan for any purpose, not necessarily home related. You can treat a top-up loan like a personal loan and use it however you want, be it for a high-end electronic purchase or a vacation abroad. You could use it as investment capital for setting up your business or to pay for your child’s educational expenses. The choice is totally yours.

- You can enjoy a long tenure with top-up loans of up to 20 years or until your original home loan’s balance tenure. But this depends completely on the bank’s discretion, which takes in to account a customer’s profile, income, age, value of property, etc.

- The maximum amount you can get as a top-up home loan differs from bank to bank. So, while HDFC Bank offers you Rs. 35 lakh, State Bank of India gives up to Rs. 5 crore. However, you need to keep in mind that the total of the balance home loan amount and the new top-up loan amount should not exceed 70-80% (differs from bank to bank) of the value of the property

- Top-up loans are available at interest rates similar to home loan rates. However, interest rate of a top-up loan may be slightly higher than the original home loan rate. For example, SBI offers home loans at 9.4% while it offers top-up loans at 9.5% for up to Rs. 25 lakh.