Top-Up is the additional loan drawn on an already existing loan to meet your variety of professional and personal needs. It is the best loan that can be applied with minimum documentation and attractive rates with fastest approval and disbursement of the desired loan amount. The Top-up amount cannot be used for speculative purposes. The top-up facility is also available in the form of an overdraft facility for the borrowers. Top ups can be applied on variety of loan products with loan lenders i.e. Banks/NBFCs.
You can apply for a top-up loan on following different loan products.
- Home Loan.
- Mortgage Loan.
- Commercial Loan.
- Home Improvement Loan.
- Home Extension Loan.
- Car Loan.
- Personal Loan.
- Balance Transfer Loans.
Who Can Apply For Top-Up Loan?
An eligible loan borrower who has availed any of the above mentioned loans from the lender is eligible to apply for a top-up loan with existing lender or with new lender by the way of loan switch over subject to the clear repayment records.
- An eligible borrower within the age group of 21 years to 70 years.
- An eligible borrower with regular flow of income.
- Eligible borrower of any profile whether salaried, self-employed, professional, NRI or a company.
- Borrower with clear EMI repayment track record for 12 months.
- Borrower having clear and good CIBIL scores including the CIBIL scores of the co-borrowers.
How Much Top-Up Loan Can I Take?
An eligible borrower fulfilling the precondition of CIBIL scores and EMI repayment track can draw a top-up on his existing loan subject to his income eligibility, outstanding loan tenure and to the market value of the property when applied on secured loans taken against property. Income eligibility is determined on the basis of his legally drawn per month income /annual profits as per salary slip/form 16 or Income tax returns subject to obligation/per month deductions towards obligations i.e. loans. The income eligibility of the borrower cannot exceed the prescribed FOIR (Fixed Obligation Against Income Ratio) norms of the lenders which are as mentioned below.
The standard FOIR norms:
- For salaried 60%-65% of the income/net profit.
- For self-employed & professionals 65%-70% of the income/net profit.
The eligibility of the borrower as per the market value of the property cannot exceed the maximum LTV (Loan To Value) norm of the lenders i.e. 80% of the market value of the property.
Lenders have a capping on the maximum loan amount that can be drawn as top-up which differs from lender to lender. For home loan, the maximum loan amount for top-up can depend on the balance outstanding home loan amount or a specific amount as set by the lender.
Loan Tenure And Processing Fees On Top-Up Loan
The top-up loans can be taken for maximum loan tenure of 15 years. The tenure is subject to the type of the loan on which the top-up is applied for. For personal loan and car loan maximum tenure for top-up remains 5 years or extended till 7 years while in home & mortgage loans maximum top-up tenure is available for up-to 15 years.
Processing fees on top-up loans differ from lender to lender and as per the applied loan product but the processing fees collected in general range from 0.50% – 2% on the loan amount plus applicable GST.
Interest Rates On Top-Up Loan
The interest rate on top-up loans depends on the type of loan on which the top-up is drawn. The interest rates also differ with the lenders. With the prevailing competition in the mortgage industry, the competitive interest rates for top-up loans differ with nationalized banks, private sector banks & with NBFCs. Interest rates of NBFCs are generally high and therefore applying for a top-up loan with NBFCs is usually costlier. Why Home Loan Interest Rates Of NBFCs Higher Than Banks! Click to know in detail.
Interest rate for top-up loans applied along with the balance transfer of the loan with the new lender attracts lower interest rates in comparison to interest rates for top-up loans applied with the existing lender.
- Top-up interest rates can either be floating or fixed.
- Top-up interest rates of leading lenders for home loan range from 7.35%p.a. – 11.15%p.a.
- Top-up interest rates of the lenders for personal loan range from 10.75%p.a. – 24%p.a.
Housing Loan Top-Up Interest Rates Of Top Lenders
|ICICI Bank||7.35%p.a. – 8.70%p.a.|
|HDFC Ltd.||8.30%p.a. – 8.80%p.a.|
|Canara Bank||7.45%p.a. – 9.50%p.a.|
|SBI||7.90%p.a. – 10.20%p.a.|
|Axis Bank||7.55%p.a. – 8.55%p.a.|
|Citi Bank||7.45%p.a. onwards.|
Note: Interest rates are subject to change without prior notice.
Additional Read: Home Loan Interest Rates꘡Compare Rates Of Top Banks
Documents Required For Top-Up Loan
Top-up loan applied with the existing lender requires minimum documentation and the turnaround time for loan disbursement is maximum up-to 7 working days.
Documents Required For Home Loan & Mortgage Loan Top -Up
|With Existing Lender||Home Loan Balance Transfer With top-up|
|KYC||Pan Card, Adhar Card, Photograph||KYC||Pan Card, Adhar Card, Photograph|
|Income Documents||Salaried – 4 months Salary Slips, 6 months Bank Account Statement, 2 years From 16. Self-employed – 3 years ITR with Saral Copy, Balance Sheet, P&L Account, Capital Account – CA certified with membership no. and UDIN No.||Income Documents||Salaried – 4 months Salary Slips, 6 months Bank Account Statement, 2 years From 16. Self-employed – 3 years ITR with Saral Copy, Balance Sheet, P&L Account, Capital Account – CA certified with membership no. and UDIN No.|
|Others||LOD||Property Documents||Prior Chain of Agreement, OC/CC + approved plans, Index 2, Share Certificate, Society Registration Copy, Property Tax.|
|Others||LOD, Loan Outstanding Statement & 18 months Repayment Track Record.|
Tax Benefits On Top Up Loan
The tax benefits on the top-up loans can be claimed only when the top-up amount taken is used for repairs, renovation, construction & acquisition of the residential property provided you have proper documentation & receipts to prove that the top-up amount is used for the said purposes.
- For a self-occupied house the maximum tax amount that can be claimed is Rs.30,000/-.
- For a let-out property, there is no limit on the deductions that can be claimed. However, maximum set-off that can be claimed in a financial year against other heads of income is Rs 2 lakh.
- The total interest deduction on the home loan and top-up will be Rs 2 lakh in a financial year.
For example: If interest paid on top-up is Rs.35,000/- . Maximum deductions that can be claimed is only Rs.30,000/-. Further the interest paid on the regular home loan will be deducted from the balance Rs 1.7 lakh i.e. Rs.2 lakhs minus Rs.30,000.
- Any interest payments over and above Rs 2 lakh in a financial year will be carried forward up to eight years.
- The tax benefits on the principal repayments depend on the use of the funds. If the funds are used for the construction or purchase of a new property, the principal along with interest will be eligible for deduction subject to the limits provided in section 80C for principal amount and 24 (b) for interest amount.
- If the Top-up amount is used for business purposes- tax benefits on interest can be claimed as business expenses under section 37 (1).
Housing Loan Top Up Comparison Of 3 Top Lenders.
|Sr. No.||Top-Up Loan||ICICI Bank||HDFC Ltd.||Canara Bank|
|1||Lender Classification||Private Bank||NBFC||Nationalized Bank|
|2||Applicable For||Existing borrowers & balance transfer loans.||Existing borrowers & balance transfer loans.||Only for existing borrowers.|
|3||Loan Age||Loan must be minimum 6 months old.||Loan must be minimum 6 months old.||Loan must be minimum 12 months old.|
|4||Rate Of Interest||7.35%p.a. – 8.70%p.a.||8.30%p.a. – 8.80%p.a.||7.45%p.a. – 9.50%p.a.|
|5||Loan Amount||MinimumRs. 50,000/- and maximum 100% of original loan amount sanctioned.||Maximum up-to Rs.50 lakhs.||Maximum up-to Rs.25 lakhs.|
|6||LTV Funding||80% of the property cost.||80% of the property cost.||75% of the property cost.|
|7||Loan Tenure||Balance tenure of existing loan or 10 years whichever is higher. (subject to max tenure defined as per the customer profile)||Maximum up-to 15 years.||For Term Loan – Remaining repayment period of existing housing loan or 120 EMIs, whichever is less. (subject the loan is closed before 70 years of the age of the borrower). For Overdraft – 3 years.|
|8||Processing Fees||For Salaried: Up to 0.50% of the loan amount or ₹3,000 whichever is higher, plus applicable GST. For Self-Employed Professionals: Up to 0.50% of the loan amount or ₹3,000 whichever is higher plus applicable GST. For Self-Employed Non-Professionals: Up to 1.50% of the loan amount or ₹4,500 whichever is higher, plus applicable taxes.||Range from 0.50% – 1% on the loan amount plus applicable GST.||0.50% of loan amount subject to a minimum of Rs.100/- and maximum of Rs.500/- plus applicable GST.|
|Apply For ICICI Bank Top-Up Loan||Apply For HDFC Ltd. Top-Up Loan||Apply For Canara Bank Top-Up Loan|
|Loanfasttrack is a direct sales associate with ICICI Bank, HDFC Ltd. & Canara Bank.|
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