How to Secure a Home Loan Top-Up: Key Steps and Tips

A home brings financial and social security. However, buying a home is not easy, especially in the current market scenario when real estate prices have significantly increased, especially in some cities where real estate prices have almost doubled in the last year. When you buy a home, there are additional costs involved. For instance, a year after buying your home, you may want to undertake a home improvement or extension project. You might consider adding an extra room or working on the garden or patio area, a project that you had previously set aside due to budget limitations. Such projects require additional funds and a home loan top-up can help you secure the funds needed to complete these projects. 

A home loan top up is an additional loan that one avails of over and above their home loan. Financial institutions extend these loans to their current or existing clients. Top-up loan interest rates are low and the loan repayment period is long enough to ensure stress-free repayment. Let us discuss the eligibility criteria for home loan top-up loans to help you get approved for them. 

Home Loan Top Up: Eligibility Criteria 

1. The most important eligibility criteria for home loans is that the loan borrower must be an existing loan borrower. Financial institutions sign home loan top-ups only to those individuals who already have a loan account with the lender. 
2. The loan applicant must meet the age eligibility criteria as well. In general, lenders require that loan applicants be at least 21 years old when applying for the top-up loan. Lenders usually set the maximum age at 65 years. Age requirements vary from lender to lender. So, it’s best that you check with the financial institution you are applying to before applying for a home finance top-up.
3. Most financial institutions also sanction top-up loans only to those individuals who have a clean repayment history. In other words, you must have cleared all your EMI payments over the last six months or one year. If you’re planning to apply for a top-up loan and missed an EMI payment in the past year, it’s important to settle the overdue EMI as soon as possible. This will minimize the damage. Your credit score won’t take a steep hit and you will be able to secure the top-up loan on favourable loan terms and conditions. 

If you meet the home loan top up qualifying criteria, you can apply for a top-up loan. The next part discusses the home loan top-up application process.

Home Loan Top Up: Application Process 

Applying for a home loan top-up is fairly easy. Since you are applying to your current lender, you won’t be asked to submit many documents. The financial institution handling your current home loan account will have everything they will need to assess your repayment capacity. However, they may ask you for your address and ID proof documents. You can get in touch with your lender to know more about the documents needed for a home loan top-up. 

Once you have all the information and are clear on all aspects of home loan top-ups, apply for a home loan top-up by filling out the form on your lender’s website. Alternatively, you can visit their office to make the application in person. After your lender receives your loan application, they will take a call on whether to extend you a loan. If the answer is affirmative, one of their lenders will reach out to you and explain the rest of the process.

Whether you are planning to opt for housing loans or a home loan top-up, maintaining a clean repayment history, not being excessively dependent on credit, maintaining a stable income and job, and having a low credit utilization ratio will help you secure the loan easily and quickly and on the best loan terms and conditions. If your credit rating is low, do not worry. It is easy to improve CIBIL score if you are okay with committing yourself to being financially disciplined and using credit carefully. Lastly, home loan top-ups are a great option for managing additional expenses. However, it’s important to remember that a top-up will increase your EMIs, and if you’re not financially prepared, it could make repaying the home loan more challenging. So, commit to a home loan only if you are ready for another financial commitment.