Banks and non-financial companies such as Bajaj Finserv offer top up loans and home improvement loans to applicants. While anyone in need of money can apply for a top up loan, lenders will consider it only if the applicant is already availing a home loan. Top up loan on a home loan may be necessary for several reasons such as to repay another debt, for new investments, for educational purposes, to meet marriage or medical expenses, and for house renovation.
An applicant may need to beautify his or her home for additional happiness. This requires additional work on their financials once they have paid the down payment and after they have started paying their EMI. The applicant may need a home improvement loan for creating a false ceiling, plumbing and electrical work, tiling and flooring, water-proofing and roofing, external and internal repairs or painting, repair work, upgradation, and complete renovation of an already owned residential property.
For both top up loan and home improvement loan, lenders charge nearly the same interest as for a home loan. Usually, lenders offer 80% of the property value as the maximum amount valid. The repayment period for both is also the same as for home loan.
Borrowers of existing home loan can avail top up loans. Usually, lenders charge a rate of interest 0.5-1% more than what they charge as home loan interest rates. Lenders offer 80% of the property value as the maximum amount valid for a top up loan. Eligibility of an applicant is dependent on their credibility and other loans. Lenders offer the same repayment period as they do for a home loan. There may be repayment fees if the borrower wishes to repay the loan even before the tenure is over. Even when the borrower is in a home improvement loan, he or she can claim tax deduction on loan.
Banks and other lenders charge interest rates in similar terms for home loans, top up loans and home improvement loans. Although the lender charges additional processing fees for both types of loans, they may make some minor differences based on the profile of the borrower.
Additional Read: Also Know about Home Loan Balance Transfer
