Looking for top-up home loan? Changing lenders may help1 min read . Updated: 06 Jun 2021, 08:10 PM IST
- When making a home loan balance transfer request, you will need to check with the financial institution about its policy for a top-up
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.
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 firstname.lastname@example.org and get them answered by industry experts)
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