Home Loan Top Up Vs Home Improvement Loan - Home Loan Stories

09 JUNE, 2021

After you avail a home loan and purchase your dream house, you might still need some extra money for home renovation, restoration, or extension. That’s when a top-up home loan or a home improvement loan can be of great help. Between the two, which one should you pick? We are here are help you make the right choice.

What Is a Top-up Home Loan?

A Top-up loan is provided to the borrowers over and above their home loan. The purpose of a home loan top-up is to help borrowers fulfil their financial requirements with ease. The amount availed through a top-up loan can be used for a variety of purposes such as home renovation, educational purpose, debt consolidation, meeting medical expenses, etc. Also, it is cheaper than a personal loan.

Features of a Top-up Home Loan

A top-up loan can be easily availed if you are already a home loan customer of the bank, and have been regular with your EMI payments for the past 12 months or more
The interest rate charged on a top-up home loan is lower as compared to a personal loan or a gold loan.
With reputed banks, it is possible to avail a top-up home loan of up to 80% of the property’s value.
Repayment tenure is up to 20 years
It’s possible to avail tax benefits on the top-up loan if you have utilized the loan amount for home renovation, construction, or extension

What Is a Home Improvement Loan?

Home improvement loans are secured loans, wherein your property acts as collateral. Your home may require periodic maintenance work such as painting, remodelling, electrical work, water-proofing, repair work, etc. to be in a good condition. The renovation of your home can be a costly affair owing to the rising cost of material and labour. At such times, a home improvement loan can help you gather sufficient funds for home renovation and restoration.

Features of a Home Improvement Loan

You can furnish and renovate your home by availing a home improvement loan
Maximum loan term is 15 years and may vary as per your profile and retirement age
You can avail a loan amount of up to 90% of your property’s value
You can repay the home improvement loan even before the specified tenure. However, make sure to check the prepayment charges beforehand
Banks usually hesitate in providing home improvement loan for properties that are older than 35 years

While choosing between a home-improvement loan and a top-up loan, do the comparison based on the interest rates charged. Also, do not forget to check your loan eligibility with the help of an online loan eligibility calculator before applying for any of these loans. With Kotak Mahindra Bank, you can easily apply for any of these loan products through a quick and convenient online application process. In case of any query, do not hesitate and reach out to us. We will be happy to help resolve your queries.

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.

Home Loan Top-Up Loan Vs Home Improvement Loan - Which One Is Better?

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