How top up loans work

A top-up loan is the add-on loan that one gets above their home loan. It allows you to avail an amount of money on your home loan when you need some extra funds on an urgent basis. This loan is an additional loan given to you by the bank on top of your home loan. A top-up loan is usually offered after a few years of taking a home loan.

How a top up loan works?

A top up loan allows you to get an extra loan on top of your existing home loan. The top up loan on home loan gives you the privilege of taking an additional loan on the home loan you have already taken. This top-up loan is granted only if you have an impeccable loan repayment track. 

Are you eligible for a top-up loan on your home loan?

You can only get a top up loan if you have a home loan on which you can top it up. The home loan providers in Mumbai, which are the banks, might provide you top up loans on your home loan. And if not, you can transfer your home loan to another bank that offers top up on the current home loan. Though the terms and conditions of each bank vary, there is a need to wait for a period and clear some of the home loan amounts to take a top up loan. 

What would be your tax benefits?

Tax benefits on top up loans are determined by the reason for which the loan is taken. The tax deductions on home loans are based on the interest rates. So if you’re paying EMIs for your home loans, the interest component for this EMI can be claimed for deduction. You can also claim a deduction for the principal too.