Top-up home loans: Not just for houses but for education, health and more

Linked to your existing home loan, top-up loans offer lower rates and longer tenures than personal loans, but experts say repayment discipline is key.

For many Indians juggling long-term financial goals, a top-up home loan often emerges as a smarter borrowing option than personal or gold loans. Financial experts say that while these loans are linked to an existing home loan, they are cheaper, come with longer repayment windows, and offer more flexibility.

 

What is a home loan top up?

A top-up is an additional loan linked to an existing home loan. Borrowers with a clean repayment record and at least six months of history are generally eligible.

 

“Top-up home loans are often a better alternative to high-cost personal or gold loans, as they come with lower rates and longer tenures,” said Siddarth Jain, chief financial officer at MinEMI.

 

He added that disciplined borrowers benefit most, since EMIs remain affordable, although the overall interest outgo rises over time.  Calculate EMI: EMI Calculator Tool

 

Arpit Bansal, co-founder & chief executive officer at La Wisteria, said this product works well for planned expenses such as home renovation, education or medical costs, as it is usually cheaper than unsecured loans.

 

How much can you borrow?

The top-up amount depends largely on the loan-to-value (LTV) ratio, property valuation, and repayment behaviour.

 

“If a property is worth Rs 1 crore and the borrower still owes Rs 50 lakh, a top-up of Rs 25-30 lakh may be sanctioned, subject to income eligibility,” explained Jain

 

Sarika Shetty, co-founder & chief executive officer of RentenPe, added that lenders also check salary stability, credit history and repayment track record.

 

“Today, digital processes make eligibility checks and disbursal much quicker,” she said.

 

Common uses in real life

Borrowers use top-up loans for both planned and urgent needs.

 

• Home renovation or interiors 
• Children’s higher education 
• Medical expenses 
• Business funding

 

Jain cited the case of a salaried borrower who needed Rs 12 lakh for his daughter’s overseas education. Instead of a personal loan at 15 per cent, he secured a top-up at 9 per cent, aligning repayments with his home loan and saving significantly on interest.

 

What are the risks?

While attractive, top-ups are not risk-free.

 

Higher EMIs or extended tenure: Adding a top-up raises obligations unless the loan term is stretched.

 

Reduced borrowing capacity: Higher fixed obligations to income ratio (FOIR) can limit future loan approvals.

 

Tax treatment: Deductions apply only if funds are used for property-related purposes like renovation; personal use does not qualify.

 

“Anyone who has serviced a home loan for at least a couple of years can consider a top-up, but should compare rates, tenor and total cost with other options before deciding,” advised Satrajit Bhattacharya, founder, Weaver Services.

 

Vijendra Singh Shekhawat, chief executive officer of Choice Finserv, summed it up, “If you need funds for the long term, a top-up is preferable. But for short-term needs, a personal loan or gold loan may be more suitable.”