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Home >Money >Personal Finance >Looking for top-up home loan? Changing lenders may help

You can take a top-up home loan from your existing lender or shift the loan to another with a request to top-up.

No all those who transfer their loans do it for better rates. Many also do it because they are looking for a top-up loan, and another bank or non-banking financial company (NBFC) is willing to offer a better deal.

When making a home loan balance transfer request, you will need to check with the financial institution about its policy for a top-up.

Each bank has a different policy. For example, Canara Bank offers a maximum top-up of 25 lakh, according to data from Paisabazaar.com. Indian Bank offers up to 60 lakh. Some banks, like the State Bank of India (SBI), don’t have any limit. They would look at your eligibility, income, creditworthiness and other factors before deciding on the top-up loan.

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Many lenders also have restrictions on tenure. Punjab & Sind Bank, for example, gives a top-up home loan for up to 10 years, and so does Canara Bank. Bank of India offers it for up to 12 years.

Yet, some banks will give a top-up depending on the years left to repay your primary home loan. If you have 15 years left, they will offer a loan up to the residual tenure of the home loan.

The tenure of your top-up loan can impact your equated monthly instalments (EMI). Suppose you take a 25 lakh top-up loan for 10 years; your EMI will be 30,332. If a bank is willing to give it to you for 15 years, your EMI will be 23,891, and for 20 years, it will be 20,911.

But don’t forget, the longer the loan, the more interest you will need to pay. The interest on a 26 lakh loan for 10 years is 11,39,828, whereas it’s 25,18,640 for a 20-year loan. But then, if you manage your finances well, you can always prepay a top-up loan without any penalty.

When you plan to take a top-up home loan, first approach your lender and shop around to see what other lenders are offering.

(Do you have personal finance queries? Send them to mintmoney@livemint.com and get them answered by industry experts)

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