A home loan top up is a special facility offered by the financial organisations to the existing home loan borrowers. While some lenders limit the usage of the loan to home-related purposes, there are other financial organisations that do not have such restrictions. You can use the home loan top up facility for various personal and professional expenses like marriage, going on a vacation, debt consolidation, business expansion, etc.

If you don’t have an existing home loan with a specific lender, you can still opt for a top up facility when you avail a balance transfer and get additional funds from the new lender. The interest rate for the top up loans may be slightly higher than the traditional home loan, and it generally starts from 7% per annum. Also, the interest rate for women is usually lower than the interest rate for men.

What are the benefits of applying for a home loan top up?

  •         If you are facing a cash crunch or you need additional funds for buying a bigger home or for home renovation, applying for a home loan top up is a better alternative than personal loan as the interest rates are much lower. Affordable interest rate automatically translates to affordable EMI and the repayment becomes much easier.
  •         You can use the home loan top up amount for a variety of purposes. You can use it for home renovation, home extension, business expansion, etc. Depending on the lender, you can use the amount for personal expenses.
  •         Another significant advantage of applying for a home loan top up is that the approval process is faster, and it requires minimal documentation. This is especially true if you avail of the loan with your existing lender.
  •         Just like home loan, you can avail of tax benefits on home renovation if you use the amount for home construction or renovation.

Tax Benefits on top up home loan

You can claim tax benefit on home loan top up if you use the amount for specific purposes. The maximum deduction you can claim is up to Rs. 30,000 for a self-occupied home. If you are using the amount for renovation, repairs, or extension of the property that you have let out on rent, there is no limit on tax deduction. However, in both the cases, the tax deductions come under the overall limit of Rs. 2 lakhs per year that is available on the interest component of home loan.

If you avail home loan top up for home construction, you can avail tax benefit on both the interest and the principal component subject to the limit prescribed under Section 80C and Section 24(b) of the Indian Income Tax Act.

What are the eligibility criteria for availing home loans top up?

The criteria for home loan top up vary from lender to lender. But mostly lenders have the following requirements:


  •         You must be aged between 21-65 years
  •         You must be a self-employed professional or a salaried employee with a regular income source
  •         You must be a resident Indian

What is the maximum amount you can borrow and what is the maximum repayment term?

The maximum amount you can borrow is generally limited to the original home loan amount sanctioned to you or up to Rs. 50 lakhs, whichever is lower. Also, you can apply for a top up loan only after 12 months after disbursement of the existing home loan.

Most lenders in India allow you to repay the top up loan over a longer period up to 15 years. But it greatly depends on the lender’s assessment of your financial profile, age, etc.

Final Word

Home loan top up is an excellent facility that allows you to get additional funds for your requirements. So, make the best use of it but be aware of its various requirements and implications before you apply for the loan.