What is Top-Up Loan? Which Banks in India Offer It?

Are you eligible for a top-up loan?

  1. Existing Borrower — The top-up loan is just an add-on to the existing home loan or personal loan and hence, one needs to be an existing borrower to be eligible for the top-up loan.
  2. Clean Repayment Record — Considering the flexibility in terms of the loan purpose, banks need to be sure that the credit risk is minimised to the maximum extent possible. As such, it is imperative for you to have a clean repayment record with the bank.
  3. Security — The security as prevailing for the original loan generally prevails over the top up loan as well. So, if you are taking a top-up loan over a home loan, the house property on which the home loan has been availed will also be a security for the top-up loan. In case of a personal loan, the top-up loan will also be generally an unsecured loan.

Benefits of a top-up loan

  1. A Source of Emergency Funding — A top-up loan comes handy especially in case of an emergency funding requirement, as the bank already has the necessary documentation for the borrower ready and no additional security is required for a top-up loan. The appraisal is typically intended to update the financial details and as such, the disbursement of a top-up loan can also happen quickly.
  2. Lower Interest Rates — While such a top-up loan provides flexibility of utilisation of funds just like a personal loan, top-up loans tend to be relatively cheaper carrying lower interest rates than a regular personal loan.
  3. Impact of Unintentional Lapses in Credit History — There might be a situation wherein credit history has been impacted by an unintentional lapse e.g. an overdue amount appearing wrongly or in an account already settled some time back. While such errors can be got rectified through a standard procedure, the process may take some time. To know more about getting your credit score corrected due to mistakes, read the article here. The borrower may face difficulties for such information in case of processing of a fresh personal loan sanction but is not likely to impact the loan appraisal and sanction process for a top-up loan since the bank already has their own repayment records with the borrower.
  4. Probable Tax Benefits — Just in case you have used the top-up loan for eligible purposes like purchase or renovation of a house property or used it for education for a full-time education course, you may also be eligible for tax benefits on such loans.

What should be the repayment term for the Top-up Loan?

Option 1 — Considering the tenure of the top-up loan to be 20 years, the balance tenure of the existing loan

Option 2 — Considering the tenure of the top-up loan to be 5 years, same as that of a fresh personal loan

Which banks offer a top-up loan?

  1. SBI Top-up Loan — 8.95% to 10.25%
  2. HDFC Top-up Loan — 9.20% to 9.70%
  3. ICICI Bank Top-up Loan — Starting at 55%
  4. Axis Bank Top-up Loan — 8.80%
  5. IDFC Bank Top-up Loan — Up to80%
  6. Bank of Baroda Top-up Loan — Starting at 9.15%

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Money View is India’s #1 choice for instant loans & money management. Visit: https://moneyview.in/

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Money View

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Money View is India’s #1 choice for instant loans & money management. Visit: https://moneyview.in/

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