Home loans are low-interest, long-term loans designed to help homebuyers achieve their dream of homeownership. Home loan top-ups are extra loans that individuals can take out in addition to their existing home loans. They are extended only to those borrowers who have already paid at least one year’s worth of EMIs on their home loans. The reason these top-ups are becoming increasingly popular is due to the several benefits they offer.

Benefits of Home Loan Top-Ups

Are you considering renovating your home? Do you need funds to buy furniture or other home-related things?  A home loan top up can help you take care of various home-related expenses. Here’s why you must consider availing yourself of these loans.

1. Low Interest Rates: One of the biggest benefits of home loan top-ups and the reason why you must consider availing yourself of these loans is that lenders charge a low interest rate on these loans. They do so primarily because they are dealing with an existing home loan borrower whose repayment capacity they already understand. Home loan top-ups are sanctioned only to individuals with a clean repayment history. Thus, the interest rates are low, which makes the home loan top-up EMIs low, affordable and easy to repay. 
2. Extended Loan Repayment Tenor: Another reason why borrowers must consider availing themselves of a home loan top-up is that borrowers are given ample time to repay these loans. The home loan top-up repayment tenor ranges from 15 to 20 years. The flexibility to choose one’s repayment tenor based on one’s repayment capacity makes it easy for home loan borrowers to decide the right loan tenor and EMI for them, simplifying the home loan repayment process. 
3. Quick Processing and Disbursal: Home loan top-ups are for existing home loan borrowers. Thus, lenders already have everything they need to assess the loan applicant’s repayment capacity and sanction the loan. This leads to short loan processing time and therefore, quick loan disbursal. 
4. Flexibility in Terms of Usage: Lastly, users have flexibility in terms of how they want to use the loan money. They can use the funds to take care of any home-related expenses.
5. High Loan Amount: Yet another benefit of home loan top-ups is that home loan borrowers can avail of substantial amounts under these loans. In fact, with a high credit score, a clean repayment history, and stable employment and income, a loan applicant can easily secure a high home loan top-up amount, sometimes even as high as Rs.1 Crore. 

Now that we’ve covered home loan top-ups and their advantages, let’s explore the eligibility criteria for these loans.

Home Loan Top Ups: Eligibility Criteria

First and foremost, applicants must keep in mind that financial institutions offer top-up loans exclusively to current home loan borrowers. This means you must have an existing home loan with the institution to which you have applied for a home loan top-up. Other than that, you must meet the following eligibility criteria. 

1. There must have been no more than a single EMI bounce in the last year. 
2. If there was an EMI bounce, the applicant must have cleared the pending EMI before the next due date. 
3. They must have also cleared at least the last six months’ home loan EMIs. Depending on the financial institution they have chosen, they may even be required to have completed up to a year’s worth of EMIs before they can be considered eligible for a home loan top-up.
4. Lastly, the loan applicant must have excellent creditworthiness, as demonstrated by their credit score. If your CIBIL rating is low, you must improve CIBIL score, push it to at least 725 or 750 and then apply for a home loan top-up to get approved easily and secure it on the most beneficial loan terms and conditions.

Final Words

Home loan top-ups are additional loans available to existing home loan borrowers who have cleared at least one year’s worth of loan EMIs.  These loans offer multiple benefits, including low interest rates, long repayment tenor, high loan sanctions, and flexibility in terms of usage. However, borrowers must apply for these loans only if they are financially secure and can accommodate the additional EMIs.