Home Loan

A Complete Guide to Top-Up Home Loan

Needs in life are not a static concept. These keep changing over time. Expansion and/or evolution of needs are a reality. How does a top-up home loan fit in the evolving and expanding landscape? It bridges the gap between demands, desires and fund supply. If your budget does not support your needs for home purchase, decoration or renovation, a big relief comes in the form of a top-up home loan.

Top-up loan is not a new home loan. The concept is central to ease and convenience that will give you peace of mind in times of a new buy or renovating the old one. In this article, we will try to explore the concept of a top up home loan.

What is top-up home loan?

A top-up home loan is not a new loan; rather an addition to your existing loan if you need more funds. If your expenses are more than initial estimate, a top-up loan can serve your purpose. If your application for a top-up home loan is approved, your lender will release more funds within the previous loan. This way, you will be exempted from undergoing a fresh procedure for loan sanction and disbursement.

The turnaround time for a top-up loan is shorter. Hence, you can use the money with greater liquidity and flexibility. On top of that, the competitive interest rate on a top-up loan makes it an ideal choice.

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Criteria eligibility documents

Documents Needed to Take out Top-up Home Loan

In most cases, the lender will not ask for any document as you already submitted them for obtaining the original loan. However, you should always keep some documents ready so that you can produce them if asked to do so. These documents are:

2. Income Documents – Salaried:

  • Address Proof
  • Photo Identity Proof
  • PAN Card
  • Income Proof
Eligibility Criteria

To obtain a top-up home loan: you must meet the following criteria:

Your age must be between the minimum and maximum limits set by the lender institution.
Whether you are a salaried person or self-employed, your minimum income must meet the standard set by the lender.

You must be a permanent citizen of the country, where the lending institution is registered and runs its business.

There are other conditions too and you must check with your lender for the details.

Important Points to Remember

In a few cases, your lender may ask for other things. Hence, it is always better to know what you are required to submit for getting a top-up on your existing home loan.

You must remember a few points before applying for a top-up loan on your existing home loan.

The interest rate on your top-up loan may be slightly higher than that on your existing home loan. Still, a top-up loan is a good choice due to the simple and straightforward process involved in it.

You can use a top-up loan to buy a new home or furnish/renovate it.

The loan tenure can be up to 20 years or until the original loan is settled. The lender will decide the term according to your age, annual income, type of property and property value.

How to Improve Your Chances After a Home Loan Rejection

If your home loan application was rejected, here are some simple steps to boost your approval prospects next time:

  • Maintain a credit score of 750 or above.
  • Review your credit report for any errors.
  • Consider adding a family member with income as a co-applicant.
  • Increase your down payment contribution.
  • Compare home loan offers from different banks and housing finance companies (HFCs) before finalizing a deal.
  • Avoid applying for multiple loans within a short period.
  • Ensure your total EMIs, including the proposed home loan EMI, are within 55-60% of your net monthly income.

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