Getting a home loan is a wise decision when it comes to financing a house purchase without putting an additional burden on your savings. With home loan being a major expense for an individual and interest rates on the higher side, most people consider opting for a home loan balance transfer. This enables them to get lower interest rates from another lender, which may involve revised repayment terms and better services. There is another option that borrowers can consider – which is a home loan balance transfer top-up loan.
See also: How to choose right home loan lender?
What is a home loan top-up?
A top-up loan is a facility offered by most banks and lending institutions, which enables a borrower to get an additional home loan besides the principal loan. The maximum loan amount one can get, and the loan tenure may differ from lender-to-lender. One can opt for a top-up loan from the existing lender or a different lender by going for a home loan balance transfer.
Benefits of home loan balance transfer top-up loan
Lower interest rates
With top-up loans, one can avail of lower interest rates compared to other loans, such as personal loan and credit card loan. Thus, it makes it an ideal choice for home loan borrowers looking to fulfil their financial requirements.
Flexible repayment terms
Similar to the home loan, a top-up loan comes with convenient repayment terms, which include longer repayment tenure. Thus, it helps one minimise the burden of a loan as one can repay the amount over a suitable period without any financial burden.
Choice of lender
One has the option to get a balance transfer loan top-up from his existing lender or choose a new lender that is offering a balance transfer along with a top-up. A balance transfer is a facility available when one transfers his loan account to a new lending institution.
Multipurpose uses of top-up loan
While home loans are applicable only for property-related expenses, a top-up loan provides flexibility as one can use it for other purposes. These can include expenses, such as house renovation, debt consolidation, weddings, education-related costs, emergencies, etc.
Eligibility criteria
The eligibility criteria for home loan top-up are the same as those applicable for a home loan from the lender, where you have applied for a loan or have obtained a loan. This may vary depending on the lending institution.
- Age should be between 21 and 65 years
- A borrower should be a resident of India
- One can be a salaried or self-employed individual
- Borrowers should have a regular source of income
- They must have completed a minimum of 12 EMIs with the existing lender
- There should not be any outstanding amount with the existing lender
Documents required to apply for home loan top-up
Usually, the lender requests for standard documents for completing the application process. These include:
- Duly-filled application form
- KYC documents, including identity and residential proofs, such as Aadhaar, PAN card, Voter ID card, etc.
- Proof of income, such as, latest Form-16, recent two months’ salary slips, latest bank statement, etc.
- Property-related documents
- EMI receipts of the existing home loan for 12 months
FAQs
Who is eligible for a top-up home loan?
An existing home loan borrower with a clear repayment history and meeting the specified eligibility criteria can opt for a top-up home loan.
Can I transfer the home loan and top-up loan to another bank?
Yes. You can go for a balance transfer by switching the loan amount from one lender to another.
Is a home loan balance transfer a good idea?
One can save on high interest payments by opting for balance transfer home loans.
Which is the best bank for the balance transfer of a home loan?
Most top banks, such as HDFC, Axis Bank, SBI, etc., offer the facility of home loan transfer.
What is NOC for home loan balance transfer?
A no objection certificate (NOC) or a consent letter must be sent by the existing lender and submitted to the new lender when opting for a home loan balance transfer.
What is the limit for home loan top-up?
One is eligible to get a top-up loan with a maximum amount equivalent to the originally sanctioned home loan amount.
Do top-up loans impact credit score?
Opting for a top-up loan does not impact one’s credit score unless one delays the loan repayment.
| Got any questions or point of view on our article? We would love to hear from you. Write to our Editor-in-Chief Jhumur Ghosh at jhumur.ghosh1@housing.com |
