With a steadily rising property price, most people are opting for home loans while purchasing a home. However, sometimes even after lending money, total required amount becomes a little insufficient. A top up loan on home loan comes in handy in this situation. A top up loan helps a borrower to obtain more money in addition to the principal home loan.
Rules for top up loan on home loan
A few rules that a top up money borrower should have in his mind are as follows:
- Documentation is required when applying for a top up loan. The procedure of application is kind of similar to taking a home loan. However, a borrower will need to submit documents related to the home or the property while applying for a top up loan on home loan.
- In the case of top up loans, the interest rate is a bit higher than a regular home loan. However, the interest rate on home loan depends on a borrower’s credit profile.
- The top up tenor depends on the money lenders. It can be anytime from 10 years to 30 years. Some financial institutions also check the age of a borrower while approving the tenor.
- The principal amount depends on the financial institution that is lending the money. Some lenders can offer unlimited top up loans while some have limitations.
- If the money borrower is borrowing money to repair or refurbish the home like adding a new room. Then a borrower can get tax benefits.
Documents required on applying for a top up loan
The documents that lenders need to approve a top up loan are same as a regular home loan. These documents are-
- Identity Proof – It can be copies of voter card, aadhar card, passport, driving licence
- Residential Proof – This can be any identity proof and the latest telephone and electricity bills
- Property details – The tax payment receipt, title deed of the property and allotment letter.
- Financial Statements- This should be last 6 months’ bank account statements and salary slips. In case of business owners or any self employed individuals, the financial statements are the income tax return statements, proof of business and profit-loss statements.
Eligibility criteria of a top up loan on home loan
The eligibility criteria for a home top up loan are similar to the regular home loan. Before applying for a top up loan a borrower must calculate home loan eligibility. However, the following are some critical things that a money borrower should keep in mind while taking a home loan in India.
- A borrower should not have had more than one EMI bounce in his or her previous year.
- In the case of an EMI bounce, then it should be cleared as soon as possible and definitely before the due date of the next EMI payment.
- This loan to value should not be more than 70% of the property value.
- A lender may need a one-year borrowing money repayment history to approve the top up loan on home loan.
Several reputed financial institutions extend pre-approved offers on different credit instruments like loan against property and home loans. These offers fasten the whole loan application stages and procedure. Eligible candidates can check their pre-approved offers by providing a few details on a lender’s website.
Getting a top up loan on home loan is not very tough. Now that this article states all the rules one must remember, applying for a top up loan will be easy. While applying for a top up loan on housing loan a borrower should check any home loan eligibility calculator. A home loan calculator will help to know the basic changes of payable EMI and total payment amount even before availing of the top up loan.