Want to renovate home? Top-up loan offers tax deduction on interest portion

Tax benefit is available only if the funds are used for repair and renovation

During the festive season, many borrowers opt for a top-up on their existing home loan if they are planning for a big expenditure like renovating their home or constructing an additional room. Unlike a home loan, which fetches a borrower income-tax (I-T) deduction on the principal as well as the interest, the tax benefits in case of a top-up loan vary with end-use.

When an individual is looking to raise a large sum, a top-up is the cheapest loan he can get against an asset with minimum paperwork. Private lenders such as Axis Bank offer the loan at 8.45-12.10 per cent