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.
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%.
[Also Read: Have a home loan? Know how you can get one more]
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.
Disclaimer: The Source, a content creation and curation firm has authored this article. Axis Bank does not influence the views of the author in any way. Axis Bank and The Source shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision.
