Home Loan Not Enough? Take a Top-Up on Your Home Loan - Home Loan Stories | Kotak Mahindra Bank

05 MAY, 2021

Buying a home requires a substantial amount of money, and hence, most people avail a home loan to finance the purchase. The good part about a home loan is that it offers a high Loan to Value (LTV) ratio. LTV ratio is the proportion of the property’s value that a lender finances through a home loan. Borrowers with a good credit history can avail a loan amount of up to 90% of the property’s value.

While this amount can be significantly helpful in purchasing the house, you may need some additional funds for other home-related expenses such as home renovation, repair, extension, etc. This is where a top-up home loan can come to your rescue. A top-up loan is a facility provided by lenders that allows you to borrow a certain amount of money over and above your existing home loan.

Learn about the various aspects of a top-up loan:

Top-Up Loan Eligibility Criteria

In order to avail a home loan top-up, you must:

  • Have an existing home loan with the lender
  • Have a good repayment history of at least past 1 year


In addition to the above-mentioned eligibility criteria, top up loans have a few more terms and conditions, which are stated as under:

  • It is possible to avail home loan top-up only after a few months or years of repayment of the home loan. This period may vary from lender to lender.
  • The top-up loan amount would largely depend on the current market value of the property.
  • The tenure of the top-up loan would depend upon the tenure of the outstanding home loan.


Let’s check out some of the major benefits of availing a top-up on a home loan:

Benefits of Home Loan Top-Up

Multipurpose usage

In addition to using the loan amount for home-related expenses, you can also use the top-up loan for various other purposes such as funding children’s higher education, business requirements, managing wedding expenses, etc.

Lower interest rate

The interest rate on a top-up home loan is lower as compared to a personal loan. Moreover, you wouldn’t be required to pledge any collateral while availing a top-up loan. This is because your home loan is already a secured one.

Ease of availability

Top-up loans can be availed easily as the lender would already have all your necessary information and documents because of your existing home loan. Moreover, if you are on good terms with your home loan provider, and have a good repayment record, the top-up loan can be processed instantly.

Tax benefits

You can avail several tax benefits on your top-up home loan only if you utilize the loan amount for home-related expenses such as construction, repair, renovation, extension, etc. Make sure that you preserve the receipts and documents of all the work done on the residential property to claim the tax benefits

The maximum income deduction available is up to Rs 30,000 if the top-up loan is used for a self-occupied home. Whereas, if the loan amount is used for a rented property, there won’t be any cap on the deductions. However, it must be noted that this will also come under total deduction of Rs 2 lakh per year that is available on the interest component of home loans.

All these benefits of a top-up home loan make it an ideal choice for financing additional home-related expenses. With Kotak Mahindra Bank, home loan customers can easily avail a top up loan at a competitive interest rate. Moreover, top up loans are available for a longer tenure than a personal loan or gold loan. So why wait? Get a top-up home loan and take care of the additional expenses with ease. Lastly, do not forget to read the fine-print of the loan agreement carefully before availing the loan.

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Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.