15 NOVEMBER, 2019

Many people around us prefer to take personal loans to get financial aid at the time of need. Although it is a perfect way to get the required monetary assistance, there is a better option when you have already taken a home loan. The name of this option is home loan top-up.

Lending institutions like banks or NFBCs provide the excellent facility of top-up loan to their home loan borrowers. A top-up loan is an additional amount that you can borrow over and above your original home loan amount. From vacation to interior decoration and education of your child to emergency medical expenses, you can use the amount obtained through top-up for any purpose.

Now, you must be thinking that a top-up loan must be a synonym for a personal loan. Although both of them serve the same purposes, they differ in terms of factors like interest rates, tenure, etc. Here are the benefits of getting a top-up on your home loan,

Hassle-free process

Along with multi-purpose use, top-up home loans are famous among home loan buyers due to their easy accessibility. You are required to go through minimal documentation to avail of a top-up loan from your lender. This is because primary documents have already been at the time of availing a home loan.

Top-up loans are availed quickly. Here, you need to note that keeping a clean repayment history improves your chances of getting a top-up loan.
A top-up loan is an excellent way to obtain funds in a short period. Though they are easily accessible for home loan borrowers, not all of them can get one.

Eligibility for Top-up

Every home loan borrower is not eligible for a top-up loan. Lenders consider various factors before providing a top-up loan. Some of these factors are the capacity to repay both loans, track records, etc. Moreover, lenders check the credit report of the applicants before granting a top-up on your home loan. So, if your repayment history is good, your chances of getting a top-up loan increase.

Interest Rate

Generally, top-up loan interest rates are usually 0.5% to 1% more than the interest rates on your current home loan.


The tenure for top-up loan changes according to lenders. Generally, it is equal to the remaining period of the current home loan.

Top-up Loan Amount

Every bank has its own guidelines to decide the maximum top-up loan amount. Generally, they do not approve the amount exceeding the amount of current home loan.
Understanding the above guidelines is essential when you are planning to apply for a top-up loan. They will not just help you understand the process but also guide you to improve your chances of getting a top-up on your home loan amount.

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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.