What is an instant home loan top-up?

5 MinsSep 14, 2022

Deepak Deshpande, 44, and his wife Mala are both dentists. After working with a reputed hospital for over 15 years, they have decided to branch out and start their clinic. Having identified what they think is the ideal location – an upmarket residential area with excellent frontage – they have signed a long lease for the premises.

What is an instant home loan top-up?

They now need about Rs. 20 lakh to do up the interiors of the premises and purchase the necessary equipment. The Deshpandes were considering taking a personal loan and spoke to their Axis Bank Relationship Manager (RM).

The RM suggested a more cost-effective alternative. He pointed out that the couple had taken a 25-year home loan of Rs. 60 lakh, 15 years ago. They have a spotless repayment record and have, so far, repaid about Rs. 23 lakh of the principal amount. In the interim, the value of their home has almost trebled to about Rs. 1.80 crore.

This means their residual equity in the flat (current value minus the outstanding principal) is about Rs. 1.43 crore. Deshpandes, the RM said, could draw on part of this residual home loan equity to fund their clinic. This could be done in the form of a Home Loan Top-Up.

What is a Home Loan Top-Up?
Home Loan Top-Up is an additional loan on top of an existing home loan. Borrowers can use these funds for multiple permitted purposes.

What are the permitted purposes?
Axis Bank allows the use of Home Loan Top-Up funds for the construction of a residential or commercial property, personal requirements or business purposes. Such funds, however, cannot be used to buy additional residential property or for speculation.

How much can someone borrow?
Axis Bank allows Home Loan Top-Ups up to a maximum of Rs. 50 lakh, subject to the value of the property and the customers’ credit history and repayment capabilities. In the Deshpandes’ case, their requirement is only Rs. 20 lakh, and neither their credit history nor repayment capabilities are a question. They should therefore get a Home Loan Top-Up quite quickly.

What is the tenure of the Home Loan Top-Up?
The Home Loan Top-Up is co-terminus with the existing home loan. This means the Desphpandes will have another ten years to repay the top-up. During this period, they will repay the original home loan and the top-up balance amount.

What is the applicable interest rate?
The property secures these kinds of loans. As a result, the interest rate charged is much lower than unsecured loans. Axis Bank, the RM told them, offers Home Loan Top-Up starting at 8.65%.

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He pointed out that if the Deshpandes were to opt for a personal loan, as they originally planned, the maximum tenure would only be five years. Also, interest rates for personal loans start at 12%.

What is an Instant Home Loan Top-Up?
Instant Home Loan Top-Up is an excellent product that existing Axis Bank customers can avail of. As the Bank already has their KYC details, property details and credit history, they can apply for the loan online. Zero documentation is involved and funds are instantly credited to the customer’s account. Its features include:
1. Nil foreclosure charges and Pre-payment charges*
2. Tenure up to 15 years*
3. Zero Documentation
4. Instant Credit of funds
* Nil charges only for floating rate of interest.
** Maximum Tenure of 15 years or Residual Parent Loan tenure (whichever is lower).

To know more about Axis Bank Instant Home Loan Top-Up, click here. Check home loan interest rates before applying and use the home loan EMI calculator to find out how much interest will be payable.

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