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About Top-Up Loans

Anyone can face the immediate need for money at any time. It could be for any reason like home renovation, construction, children’s higher education, marriage, long-awaited vacation or even some unforeseen medical emergency. That is where banks and financial institutions come in to assist with their line-up of loan products. Banks have numerous loan products to suit a person’s needs – Home loans, Car loans, Personal loans, Educational loans, etc.

There are many options available for one who needs money in an emergency. A specially designed loan product offered by banks for this purpose is a top-up loan. A top-up Loan, as the name suggests, is a loan offered over and above your existing Home Loan.

An existing home loan borrower can borrow an amount over and above their home loan amount for the same or similar interest rate and tenure. This allows for quick money in the customers hand to meet their emergency.

A top-up loan can also be availed on an existing personal loan. However, only individuals who have good repayment history will be offered top-up loan on a personal loan.

Top Up Loans
Top Up Loans

Who can apply for a top-up loan?

To be able to apply for a top-up loan, you need to:

  • Already have a home loan or personal loan with the bank
  • Have a healthy repayment history
  • Be willing to make a valid mortgage in the name of the bank

Purpose of a top-up home loan :

Though provided as a top-up on existing home loans, a top-up loan need not be used for modification or construction of a house only. It can also be used for other needs like children’s education, marriage or any other personal needs.

Tenure :

Top-up loans are usually given for the remaining tenure of the home loan. Some banks offer it for a maximum of 10 years, though this period differs from banks to bank.

Rate of Interest :

The rate of interest on top-up loans are usually same or similar to the existing home loans. This is decided upon the sole discretion of the bank. However, top-up loans have a relatively lower rate of interest compared to personal loans. The interest rate ranges between 8.50% - 12.00%.

Why a top-up home loan and not a personal loan?

When one needs money in an emergency, the first choice would be a personal loan. Because, personal loans are processed faster than other loans and provides quicker liquidity. However, the rate of interest is high, and the repayment tenures can be a bit stern.

This is where a top-up loan comes in handy if one already has a home loan with the bank. Since this loan is given on top of your home loan, the rate of interest is relative to the existing home loans. This ranges anywhere between 8.5% – 11.00%. Top up loans also allow for longer repayment tenures.

Here is a comparison of top-up home loans and personal loans, for better understanding

Top-Up Home LoansPersonal Loans
Interest rates from 8.5% - 11.50%Starts from 11.50% - up to 18%
Processing fees 0.25% - 1%Processing fees 1% - 3%
Loan tenure up to 10 yearsLoan tenure of 5 years
Processing time 10 – 15 daysProcessing time 2 – 5 days
Prepayment penalty – Nil (For floating interest rate)Prepayment penalty – 2% - 5%
No guarantor requiredGuarantor required

Leading banks offering top-up loans in India:

Top-up loans can be applied at the same bank as you hold your home loan. It can also be applied while transferring an existing home loan to a different bank. Some of the leading banks offering top-up loans are SBI, ICICI Bank, HDFC Bank and Axis Bank.

SBI Home Top-Up Loan

  • Available for existing home loan customers
  • Can be availed for any personal purpose
  • Interest rates are lower than personal loan rates
  • Offers low processing fees with no prepayment penalty
  • Repayment tenure of up to 30 years
  • Option of availing the top-up loan as overdraft facility (SBI Maxgain)
  • Interest rates ranges between 8.95% - 10.10% for salaried individuals
  • 9.10% - 10.25% for non-salaried individuals

Axis Bank Top-Up Loan

  • High value loans of up to Rs. 50 lakhs
  • Avail top up loans for modification/construction of residential/commercial purposes
  • Can also be availed for personal or business purposes – subject to prescribed conditions
  • Repayment tenure same as that of existing home loan
  • Existing home loan borrower with more than 6 months of clear repayment history can apply for a top-up loan
  • Rate of interest is the same as that of the existing home loan rate. The current home loan interest rate ranges between 8.90% - 9.05%

ICICI Bank Top-Up Loans

  • ICICI Bank offers easy and convenient top-up loan offers
  • Convenience of applying online with paperless transaction facility
  • Processing time as less as 24 hours
  • Top up loan amount equal to that of the original loan amount
  • Additional offers and benefits for loans transferred from a different bank
  • Repayment tenure of up to 20 years
  • Interest rates ranges between 9.00% - 9.70%

HDFC Bank Top-Up Loans

  • Highest loan amount of Rs. 50 lakhs
  • Offers one of the lowest interest rates of 8.80%
  • Can be availed for personal needs like marriage, higher education, vacation etc;
  • Loans for existing home loan borrowers as well as balance transfer customers
  • Convenience of availing loan at any branch across the country
  • Interest rate ranges between 8.80% to 9.70%

Personal loan top-ups

An existing personal loan borrower can avail a top-up on their existing loan, provided they have consistent and healthy repayment history with the lender. Borrowers can apply for a top-up personal loan for expenses like marriage, higher education, home renovation, new vehicle down payment, medical expenses, etc;

Some prominent banks offering a personal top-up are SBI, HDFC, Axis and ICICI

  • The interest rate on top-up loans is usually similar to the existing loans. According to current market trends, a Personal loan top-up can be availed for an interest of 11.25-24%.
  • Minimal documentation process since this is a top-up loan. Most banks do not require a security or collateral either.
  • The processing time is also considerably less compared to a new loan.
  • Tenure of the loan varies from 1 year to 5 years depending on the remaining tenure on the existing loan
  • Attractive interest rates for personal loans transferred from a different bank

FAQs - Top-Up Loans

1. What is a top-up loan?

A top-up loan is a loan offered over and above your existing home loan. It offers lower rate of interest with longer tenure, which makes it a better choice than personal loans.

2. Who can avail a top-up loan?

Any individual with an existing home loan account with the bank or a person who is transferring their loan from a different bank can apply for a top-up loan. However, the borrower should have a healthy repayment history of more than 6 months and should be willing to make a mortgage in the name of the bank.

3. What are the purposes for which one can apply for a top-up loan?

A top-up loan is usually applied and availed for renovation or construction of a house. However, one can avail a top-up loan for other needs like marriage, children’s education, vacation and other personal needs too.

4. Does a top-up loan need any guarantor?

A top-up loan does not need a security or guarantor, since it is given on existing home loan. However, banks may require you to mortgage the property upon which the loan is availed.

5. Where can one apply for a top-up loan?

A borrower can apply for a top-up loan with their existing home loan bank by approaching the nearest branch. Some banks offer this facility on their official website too. A borrower can also choose to balance transfer their existing loan to a different bank to avail lower interest rates and other discounts.

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