I am serving a home loan of Rs 40 lakh for the past two years for a house whose possession I will get in a few months from now. I will need Rs 4 lakh at the time of possession to furnish the house and also opt for a parking lot, which earlier I had not opted for. How can I get the extra amount?
Ranveer Kher, Mohali
Your situation is similar to that of several other home buyers, servicing a home loan. For the additional sum that you wish to borrow, you could apply for a top-up loan. A top up loan allows you to avail a loan amount on top of your existing home loan, which is mostly to the extent of the loan you have already taken and serviced. What this means is, on the two years since you borrowed Rs 40 lakh, the repayment would have reduced this sum and also provided the bank with your repaying behaviour. Based on these two factors they would extend you a top-up to the extent of the original borrowing or more depending on other conditions.
This facility is very useful for people needing urgent funds, especially towards registration or furniture for the new house. And, unlike a personal loan, on which one pays a higher interest rate, in case of a top-up, the interest is not as low as the home loan rate, but a lot lesser than the prevailing personal loan interest rate. A top up loan on your existing home loan is an ideal choice to pay for your parking space or for furniture to move into the new house on possession. Moreover, if the top-up is being directed towards the parking spot, which is part of property acquisition—you would be eligible for a tax rebate on both the principal and interest, inclusive of the rebate you are availing for the existing home loan.
