Everybody dreams of owning a house, and for that, we need another helping hand to fulfill our dreams. When a home loan does not meet all our needs, we can consider availing of a top-up loan. A Top-up loan is an additional loan that you take over an existing home loan. If you are repaying your home loan diligently, you can opt for taking a top-up loan.

A top-up loan is offered by almost all the banks to the customers who are loyal to them. If you are planning to modernize your home, then taking a top-up loan is a better option than taking a personal loan.

Some prominent features of a Top-up loan

  • Top-up loans can be applied for several purposes, such as home renovation, home decor, and furnishing. Moreover, the loan can also be treated as a personal loan so that it can be used in the time of an emergency.

  • The amount that will be provided as a top-up loan differs from bank to bank. However, as a general rule, the maximum amount of the loan can exceed 70 to 80% of the current value of the property.

  • Almost all banks or lenders provide top-up loans at the same interest rate as your home loan rate.

  • The top-up loans are available for a maximum period of 20 years or until the tenure of your existing home loan.

Benefits of a Top-up loan

Before availing a top-up loan, you should be aware of all the benefits you can get from it. 

Processing time

The approval of a top-up loan is quicker than the home loans, as the banks already have an existing relationship with the applicants. The disbursement of the amount is also faster as the bank already knows the credentials of the applicants.

Tax benefit on a top-up loan

You are eligible for tax benefits on a top-up loan only if the loan is taken only for your home purpose. For instance, you can spend the credit amount only if you are renovating your home or expanding it. Furthermore, you cannot claim the benefit if you are using the amount for educational purposes or fulfilling any business requirements. 

Lower interest rate

One of the most important factors that should be taken into consideration before applying for a loan is the interest rate. Interest rates for top-up loans are comparatively lower than that of a personal loan and slightly higher than your current home loan interest rate. However, the rate of interest for top-up loans usually ranges from 10.45%- 20% per annum. 

Repayment duration

The lender decides the repayment duration of a top-up loan based on the outstanding balance and the loan you have applied for. Usually, the repayment tenure of the top-up loan is more extended than personal loans, and this is an important reason why people choose this loan over their home loan. Besides, one must be aware of the fact that the tenure of a top-up loan cannot be longer than the mandate of the home loan.

Eligibility criteria for a Top-up loan 

The bank considers several factors like repayment of home loan, age, and income before granting a top-up loan even if you have an existing home loan. Your repayment capability should be good enough. If you are repaying your home loan earnestly and your previous record with the bank is good, then you can apply for a top-up loan. 


Hence, if you want to make your home exquisite but you are facing a cash crunch, then you can surely opt for a top-up loan. Moreover, you can check both the home loan eligibility and the eligibility for top-up loans by using a home loan eligibility calculator.