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Question: Can you please explain what a top up loan it is and will it be helpful for me?

Answer: A home loan top-up is nothing but additional loan against the same property which is already mortgaged with your loan provider. Suppose you are running a Home Loan with outstanding balance of Rs. 20 lacs against a property whose market value is Rs.60 lacs. Now, if you are in need of additional Rs.10 lacs, you can simply approach your financier and apply for additional top-up of Rs.10 lacs. When this loan amount gets approved, you will have a total loan of Rs.30 lacs against the same property of Rs.60 lacs making your LTV to 50% of the property value.

Generally, a top-up loan is sanctioned on the basis of your existing repayment record. All financiers have separate policy for maximum loan amount under Top-Up scheme. The total LTV, however, is restricted to 60% of the property value by most of the financiers.

Since, a Top-Up loan is a secured loan, the ROI ranges from 9.75%-14%. So are relatively cheaper than unsecured or personal loan whose rate of interest ranges from 13-18%. The top-up loan can be availed for personal or business use also. And if you are availing a Top-Up for the purpose of home extension/ improvement/ renovation etc. then you can claim tax benefit also.

A home loan top-up is nothing but additional loan against the same property which is already mortgaged with your loan provider. Suppose you are running a Home Loan with outstanding balance of Rs. 20 lacs against a property whose market value is Rs.60 lacs. Now, if you are in need of additional Rs.10 lacs, you can simply approach your financier and apply for additional top-up of Rs.10 lacs. When this loan amount gets approved, you will have a total loan of Rs.30 lacs against the same property of Rs.60 lacs making your LTV to 50% of the property value.

Generally, a top-up loan is sanctioned on the basis of your existing repayment record. All financiers have separate policy for maximum loan amount under Top-Up scheme. The total LTV, however, is restricted to 60% of the property value by most of the financiers.

Since, a Top-Up loan is a secured loan, the ROI ranges from 9.75%-14%. So are relatively cheaper than unsecured or personal loan whose rate of interest ranges from 13-18%. The top-up loan can be availed for personal or business use also. And if you are availing a Top-Up for the purpose of home extension/ improvement/ renovation etc. then you can claim tax benefit also. Source: CoolInterview.com

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