There are several tax benefits associated with regular home loans. The principal repayment as per section 80C of the Income Tax Act and the interest paid under section 24 of the Income Tax Act can both be deducted up to Rs 1.5 lakh in a single financial year. One can also claim the benefits of housing loan top up interest rates. One can claim a home loan top up benefits if one has topped up their home loan.
Is a home loan eligible for tax exemption? Yes, and who would not love a home loan top up eligible for tax exemption?
Do you know what is the home loan top up eligibility? Those who wish to renovate or repair their homes take a top up loan (typically 15-20 years) to cover the cost of the renovation or repair. They can claim a tax benefit on top up loans if they understand what they are and how they work.
Let us explain this home loan top up eligible for tax exemption.
What Is Home Loan Top Up?
A top up loan is a loan added on top of an existing loan. Home loans and personal loans are the most common types of such loans.
A customer with a high credit score and a good repayment capacity has a top score. This is a financial instrument that serves as a personal loan for expenses like paying for children’s education, furnishing a home, or unforeseen emergencies. Such customers meet the criteria for a home loan top up eligibility.
Let’s discuss the home loan top up eligibility criteria now.
Housing Loan Top Up Interest Rates
One can take out a top up loan for a home if the borrower has an existing loan and they need more money for the house. One can also take out a top loan against already mortgaged home loans.
Depending on a borrower’s income level and repayment record, they meet the home loan top up eligibility criteria. Banks provide top up loans depending on their financial standing. Home loan top up interest rates by the bank vary, and at the moment, they are between 8.05% and 10.55%.
There is a difference between this home loan top up interest rate and the current interest rate for home loans.
The top-up loan on-home loan interest rate, expressed in percentages, is a measure of how much interest will be levied on the principal loan amount over the term of the loan. In India, Tata Capital offers some of the lowest home loan top up interest rates in the country, starting at 8.60 percent. In the industry, home loan top up interest rates start from 8.60 percent and are affordable compared with those of other lenders in the market.
Additionally, they determine the best home loan top up interest rates for an individual’s home loan based on their loan qualification, income, credit score, and other criteria relevant to their specific home loan needs. Tata Capital offers top up loans on home loan interest rates with no hidden charges. They disclose several expenses to the individual related to processing charges, foreclosure charges, or delayed EMI payments.
Features and Benefits of Availing of a Top up Loan
Here are the various features and benefits of availing a top-up loan-
1. Multipurpose
Top-up loans do not restrict the end use of funds. These multipurpose loans can be used to fulfil financial needs such as education expenses, medical bills, home renovation, wedding costs, and more.
2. Quick processing
Since top-up loans do not involve additional document verification or credit checks, you can enjoy quick approval and processing without any hassles.
3. High loan amount
With a top-up loan, you can access high loan amounts to meet all your financial needs.
4. Tax savings
If the top-up loan is taken to purchase or construct a new property, the interest paid on the loan is eligible for tax deductions, subject to the limit under sections 80C and 24(b) of the ITA.
Home Loan Top-up Eligibility Criteria
If you’re planning to apply for a home loan top-up, here are the standard eligibility criteria to consider-
1. The applicant must be between 21 years to 65 years
2. Both NRIs and Indian applicants can apply
3. Salaried and self-employed individuals can apply
4. There shouldn’t be any outstanding dues or EMI defaults in the home loan repayment history
5. The applicant must have a credit score of 750 or above
Documents required for top-up loan
Here are the standard document requirements to apply for a home loan top-up-
For salaried employees
1. Age proof (A copy of your passport, driving license, birth certificate, life insurance policy, or school leaving certificate)
2. Photo ID proof (A copy of your voter ID card, passport, PAN card, or Aadhaar card)
3. Address proof (A copy of utility bill, property registration documents, property tax receipt, bank statement, or Voter ID)
4. Income proof (A copy of your salary slips for the last three months, salary bank account statements for the last 12 months, appointment letter, or a certified copy of Form 16)
5. Existing loan details (Through bank statements or loan statements)
6. Processing fee cheque (To be issued from your salary account)
For self-employed individuals
1. Age proof (A copy of your passport, driving license, birth certificate, life insurance policy, or school leaving certificate)
2. Photo ID proof (A copy of your voter ID card, passport, PAN card, or Aadhaar card)
3. Address proof (A copy of utility bill, property registration documents, property tax receipt, bank statement, or Voter ID)
4. Business proof (A copy of the IT returns for the last two years, business registration certificate, or your business profile on a letterhead)
5. Income proof (A copy of the last two years’ P/L projection statements, bank statements for the last 12 months, and operative current account statements for the last 12 months)
6. Existing loan details (Through bank statements or loan statements)
7. Processing fee cheque (To be issued from your business account)
Top-up fees and charges
Most lenders offer home loan top-ups at competitive interest rates with nominal additional charges such as processing fees, delayed EMI penalties, or foreclosure charges. Since these charges can vary from one lender to another, you must contact your lender to know about the additional charges and use an online EMI calculator to determine the monthly payments.
Features of Top up Home Loan Interest Eligible for Tax Exemption
Features of home loan top up eligible for tax exemption are:
Longer-Term: It’s easier to repay a top-up loan than a personal loan with a repayment period of 20 years.
One gets top up loan on home loan interest rates: House loans are more affordable than personal loans due to their lower interest rates. Due to these circumstances, it is preferable to get top up loans on home loan interest rates in an emergency.
Bigger Loan Money: By topping up, one can get a loan of up to Rs. 50 lakhs from the banking institution. Nevertheless, the bank’s policy limitations must be adhered to in terms of the top-up loan and the outstanding house loan amount.
No Need For Security: Top-up loans are secured in addition to existing home loans, so additional security is not required.
Fulfills Different Needs: In addition to meeting wedding expenses, top up loans can also be used for education, business, home renovations and construction.
Rapid Processing: Because no additional background check or documentation is required, obtaining a top up loan takes little time.
How to apply for a top-up loan with Tata Capital
Tata Capital offers quick top-up loans at competitive interest rates. Here’s how you can apply-
1. Visit our website, give us a call, or contact us via WhatsApp to get started with the top-up loan application process
2. Provide your personal, employment, and financial details.
3. Check your loan eligibility and home loan top-up interest rate
4. Provide your home loan top-up amount details
5. Submit details of your existing home loan
6. Submit the necessary documents and fees
Conclusion
Borrowers must provide recent bank statements, income proof, and CIBIL scores to apply for a top-up house loan. To expedite the approval process, one should submit them as soon as possible after receiving them. But the best part is home loan top up is eligible for tax exemption. It may be necessary to provide basic KYC and property-related documentation if one wishes to transfer a balance or top up their house loan.
Now that one knows that a home loan top up is eligible for tax exemption, one should be able to take advantage of all the perks that come with a top-up house loan. In addition to being a hassle-free top up home loan disbursal service, Tata Capital also offers a relatively low processing fee, and the interest rates over the top up loan on home loan interest rate are similar.
FAQs
You may avail of a top-up facility when applying for a balance transfer loan, depending on the lender. This allows you to transfer your existing home loan to another lender for better terms and simultaneously get additional funds as a top-up loan based on your eligibility.
The maximum term for a top-up loan varies, depending on the lender's policies and the remaining tenure of your existing home loan. It's advisable to check with your lender for the exact terms.
Lenders usually have a 12-month waiting period after the disbursement of the home loan to ensure a timely repayment history and financial stability of the borrower. This period helps the lender assess the borrower's repayment capacity and creditworthiness before approving additional funds.
Co-applicants can get top-up loans on a housing loan, provided they meet the lender's eligibility criteria. Both the primary borrower and co-applicant's income and credit profiles will be considered to determine the eligibility and amount of the top-up loan.
05 December 2024
8 mins read
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