A top-up loan is essentially a second home loan availed of against one’s home. This is the top-up loan meaning in very simple words. 

Borrowers who are currently repaying a home loan can request their current lender for a top-up loan on their current housing loan or they can transfer the remaining balance on their loan to another lender (also referred to as the home loan balance transfer) and then avail of the top-up loan facility. Sanctioning a second loan against a home is risky and therefore, not every home loan borrower is considered eligible for a top-up loan. To be considered eligible for a top-up home loan, one must meet the following eligibility criteria.  

1. The loan applicant must have a clean repayment track record. 
2. They must have a good CIBIL score, at least in the range of 750 to 900.
3. The loan applicant must have been repaying their existing home loan for at least a year. This time can vary from lender to lender.
4. The loan applicant must have not missed more than an EMI payment over the last year and they must have cleared the missed EMI before the next due date. 
5. The loan applicant must have good repayment capacity and their income should be enough to repay the loan EMIs of both the home loans they are availing themselves of. 

Let us now walk our readers through the benefits of a home loan top-up.

Benefits of a Home Loan Top-up 

1. Low-Interest Rates: When it comes to loans that involve a hefty amount, the loan borrower must secure a low-interest rate. The rate of interest extended on a loan determines the EMIs that one will have to pay along with the total interest that they will pay on the loan. A high interest rate automatically translates into high and sometimes, unaffordable home loan EMIs. Low-interest rates, on the other hand, can help considerably ease the burden of loan repayment. Lenders charge a low rate of interest on top-up loans. Borrowers are expected to accept only a small hike on the rate of interest at which they are currently repaying their first housing loan. This is one of the key benefits of a top-up home loan.
2. Long Repayment Tenor: The maximum repayment tenor that you can get is equal to the remaining tenor on your home loan. So, if the remaining tenor on your home loan is 15 years, you can choose to repay your home loan over a period extending up to 15 years. This ability to opt for a long repayment tenor helps one keep their top-up loan EMIs comfortably affordable and pay off the loan easily within the provided timeframe. 
3. No End-Use Restrictions: One of the biggest benefits of a home loan top-up is that the loan money comes with no end-use restrictions, which essentially means that the loan borrower can use the loan money however they like. In this day and age, where personal loans (i.e. the other types of loans that come with zero end-use restrictions) have become quite expensive, and therefore, top-up loans on home loans are an excellent way to take care of a child’s education, wedding, start a new business, buy a new property, etc. 
4. Quick Loan Processing and Disbursal: If you are availing yourself of a top-up loan on your home loan, chances are you need the loan money urgently. With top-up loans on home loans, since the lender already has all the documents they will need to process your top-up loan request, you will hear from your lender on your request for a top-up loan within only a few days of applying. Further, the loan amount will also get disbursed into your account quite quickly. Quick loan processing and disbursal are two of the other key benefits of a top-up home loan. 
5. High Loan Amount: Many people assume that under top-up loans, they cannot avail themselves of a very high loan amount. This is, in fact, incorrect. Some lenders allow borrowers to borrow up to Rs.1 Crore or even higher, provided they meet all the eligibility terms and conditions mentioned under the home loan top-up eligibility criteria.

In conclusion, a top-up home loan can prove to be a boon. However, one must avail themselves of these home loans only if one can afford to take on the burden of the added responsibility. We suggest borrowers use a home loan EMI calculator to correctly calculate how much extra they can afford to borrow and repay.