What is a Top Up Loan? Know Its Meaning, Purpose & Benefits

The word ‘Loan’ scares a lot of people but it is absolutely okay to seek help whenever you’re in need. There is no person on this planet who does not dream of buying a house. We all know buying a house in today’s world is not easy but we’re lucky enough that we have ways to fulfill our dream. One of the many ways is to take a house loan. If you’ve taken a house loan and still are in need of money then the best option is to go for a ‘ TOP-UP LOAN’.

Top up Loan infomation

What actually is a Top-up loan ?

In simple words top up loan is a financial aid or help provided by banks or housing finance companies given over and above your home loan. For your better understanding let’s take an example to understand top up loan better. Let’s say you’ve taken a home loan for a tenure of 10 years. And you have moved into the house of your dreams. Now five years later, you decide to redecorate,renovate your house, buy new furniture too. So instead of going for a personal loan you can opt for a Top-up loan ! It’s a loan given to you alongside of your current mortgage. But top up loan is not available to every person who has taken a home loan. So let’s do an eligibility criteria check.

Who is Eligible for a Top-up Loan ?

Many factors are considered before granting a Top up loan. Top up loan is granted only if you have an existing relationship with the lender. Also, you will get a Top up loan only after you’ve repaid a certain portion of your loan. A whole background check is done including your credit score. Banks check your previous records of repayment in order to see if you’ve been repaying the amount on time. Now after this whole verification process is done, you will be granted a top up loan if you satisfy all conditions. Now moving on, there are banks who charge processing fee and some banks don’t.

Top-up Loan Advantage

Every coin has two sides so does Top up loan ! Let’s look at the advantages first.

  1. No security or collateral required. No guarantor or collateral are required as the top up loan is given on your existing loan.
  2. The interest rate is mostly lesser or similar to the originally approved rate.
  3. It is more flexible as you do not have to go for another personal loan and balance transfer is also available if your existing lender charges a higher interest.
  4. Saves a lot of time. Since top up loan is given on your existing loan and you have already undergone the entire verification process and checks you can get approved for a top loan quicker than processing another personal loan.
  5. The tenure is also more which in turn reduces monthly EMI.

Top-up Loan Disadvantage

The biggest disadvantage of top up loan is that it is given only to the people who have existing home loans. Also, even if you’ve bounced one EMI chances are that you will not be approved. Your track record has to be crystal clear.

Summing it all up – For a Top up loan you will need recent bank statements and make sure that your records are clear and there is no bounced EMI. You probably will not be charged processing fee at many banks which will lead to saving money. When it comes to balance transfer you will have to go through basic KYC and documentation related to property. Now that you know everything about top up loans take advantage of its perks and fulfill all your dreams !


Can I get a top up loan from another bank ?

Yes. If your existing bank or lender does not sanction your top up loan or charges more interest than they usually should, is it possible to go for another bank.

What is the maximum period for a top up loan ?

There is no exact or specific tenure. But the time period cannot be longer than your existing loan period.

Should I go for a personal loan or a top up loan ?

Going for a top up loan is always a better option as it saves the documentation time, is available at lower interest rates and you can also get taxation benefits.

For how many years are top up loans available?

Top up loans are given for an outstanding period of existing home loans or for ten years.