What Is a Home Loan Top-Up and How to Apply for One

Buying a home and maintaining it is no easy task. These days, most people easily spend up to 15% to 20% of their home's total value on interiors. Further, even after one moves in renovations and refurbishments continue. Thus, homebuyers often find themselves in need of extra funds time and again. A top-up loan can come in handy here. A top-up loan on one's home loan refers to an additional loan availed of over and above one's current home loan. Those borrowers who have a clean repayment history and an income good enough to support the increased loan EMIs can easily apply for a top-up loan on their home loan. Before we talk about how to apply for a top-up loan, let us look at the benefits of a top-up loan.

1. Low-Interest Rates: One of the biggest advantages of a top-up loan is that these loans are sanctioned at low-interest rates. Thus, the interest outgo on these loans is not too high and repayment does not become burdensome, especially when availed of after proper planning.

2. Long Repayment Tenor: If you are planning to avail yourself of a top-up loan on your home loan, know that the tenor on your top-up loan will be the same as your remaining home loan tenor. Since home loans are long-tenor loans, top-up loans also end up having a long tenor. This also helps increase the ease of loan repayment. 

3. Zero End-Use Restrictions: Top-up loans come with zero end-use restrictions. One can use the money to renovate their home or even buy a second property or start a small business. Your lender will concern themselves with only EMI payments and as long as you keep paying your EMIs on time, your lender will not concern themselves with how you are using the money.

4. Quick Disbursal: In the case of a top-up loan, borrowers apply to a lender who already has all the documents they need for processing a loan. Further, the lender already knows the borrower and their repayment capacity. Thus, in the case of top-up loans, approval and disbursal do not take much time.

Top-Up Loan: How to Apply 

If you are planning to apply for a top-up loan, simply follow these steps: 

1. Go to your lender's website and log in to your account. Once you do that, you will see the option of being able to apply for a top-up loan online. Select this option. 

2. Next, you will be asked to enter some basic details about you, such as your name, phone number, address, etc. 

3. Next, you will get an OTP on your phone. Verify your loan application by entering this OTP.

4. Next, enter the loan amount you wish to go for. 

5. After this, depending on the lender you have chosen, you will be asked to enter financial and property-related information. 

6. Submit your application and wait for your lender to get back to you. 

A top-up loan is a smart way to arrange the money needed for any purpose. However, borrowers must keep in mind that availing of a top-up loan will increase their monthly EMI burden. So, they must make this commitment only when they are financially ready for this burden.