Mr. Hari, an IT professional with MNC, is living a comfortable life with his wife and two children in Mumbai despite servicing a home loan taken for 4 years. Hari also had a steady growth in his monthly income for the last 4 years and has made various investments for the future. With the festivals coming near Hari’s wife wanted to refurbish her house before the celebrations and suggested Hari to apply instant personal loan in Mumbai because Hari was clear of not withdrawing money from his existing investments. Previously Hari has already applied for a car loan & a personal loan and does not want to go through the hassle process once again, and hence accepting his CA’s advice he decides to apply for a top-up loan on a home loan.
Hari had a good repayment track with the Bank and with his steady income growth, he was easily eligible for a bank top-up loan.
Why Home Loan Top-up Is Preferred Over Personal Loan?
- The home loan top up procedure is easy and hassle-free.
(Click to read ICICI Bank home loan top up process)
- Relatively lower home loan top up interest rates as compared to the personal loan interest rates and flexibility in tenure makes top-up loans a great alternative to a personal loan.
- Considering that the bank already has your KYC details/documents only minimum documents required for top up home loan and the loan processing will also be faster and easy as against the personal loan where the processing time is usually long because the bank does not have your history and takes longer to verify your documents, other details, and understand your profile.
(Check out the document checklist for a top-up loan for salaried, self-employed)
- Top-Up loans also get you a tax benefit of up to Rs.1.5 Lakhs on the principal repayment and up to Rs.2 Lakhs for interest paid provided the top-up amount is used for is used only for the purchase/construction/repairs & renovations of the house and is evidentially justified with necessary invoices, receipts, agreements & legal documents. (Read more for income tax benefits on housing loans in India)
Also, read 3 Best Home Loan Top Up Loans In India. Some of the other popular top-up loan services offered by the Banks/lenders include.
- HDFC top up loan.
- ICICI top up loan.
- SBI top up loans.
- Kotak Mahindra top up loan.
- Axis top up loan.
- Canara Bank top up loan.
- Bajaj Finserv loan top up.
- Bank Of Maharashtra home loan top up.
- Top up loan Bank Of Baroda.
- IDFC top up loan.
- IIFL home loan top up.
- IDBI top up loan.
- Tata Capital home loan top up.
- Top up loan BOI.
- PNB Housing Finance top up loan.
- Standard Chartered top up loan.
- PNB home loan top up.
- HDFC Ltd. top up loan.
- LIC Housing loan top up.
- Indusind Bank top up loan.
- Yes Bank top up loan.
- UCO Bank home loan top up.
- Syndicate Bank home loan top up.
However, what is best between a personal loan and a top-up loan depends on your personal need of funds i.e. whether you have a short-term requirement or a long-term requirement. It also depends on how quickly you may require the funds. Hence, the difference between home loan top up vs personal loan varies from person to person and his needs.
When Can A Personal Loan Be Preferred Over A Home Loan?
- When you do not have any ongoing home loan.
- When you have a smaller loan requirement.
(Also read, Why is it difficult to get a loan for small ticket sizes)
- When you are not eligible for the top-up loan amount as per the LTV factor for the market value of the property.
- When you want instant funds which can be applied through the personal loan apps.
Q. How much is the ICICI home loan top up interest rate in Mumbai?
Ans: Interest rate for a home loan top up ICICI Bank starts from 6.90% p.a. onwards.
Q. Can I top up personal loan in HDFC?
Ans: Yes, you can apply for a top up loan on personal loan. For top up loan HDFC please check with HDFC for its terms and conditions.
Q. What are the current personal loan interest rates?
Ans: Current personal loan interest rates range from 11% p.a. – 18% p.a.
Home Loan Top Up Loan Vs Personal Loan
|Home Loan Top-Up||Personal Loan|
|Home top up loan means borrowing additional funds on an existing home loan.||A personal loan means borrowing fresh funds.|
|It is secured in nature, provided against the collateral of a house.||It is unsecured in nature and no collateral is required.|
|Low home top up loan interest rates.||Relatively higher rate of interest for a personal loan.|
|Flexible repayment tenure up to 15 years.||Maximum repayment tenure of up to 5 years.|
|Lower home loan EMIs.||Higher EMIs.|
|Minimum documents required for home loan top up.||Complete fresh documentation required for a personal loan.|
|Easier and hassle-free to apply as the lender has your details.||Hassle in applying since applying fresh.|
|Can be applied online through net banking, portals, and apps.||Can be applied and disbursed online.|
|Faster loan processing.||Longer processing time because of fresh loan applications.|
|Maximum processing fees of up to 1% of the loan amount.||Higher processing fees up to 3% of the loan amount.|
|Maximum pre-closure charges of up to 2% of the outstanding loan amount.||Higher pre-closure charges up to 5%-6% of the outstanding loan amount.|
|Tax benefits available.||No tax benefits are available.|
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