Why a Home Loan Top-up Makes More Sense Than a Personal Loan

home loan

Borrowers seek financial assistance to address a variety of expenses, such as unforeseen emergencies, big-ticket purchases or even a vacation.  Most lenders offer different loans to cater to the different needs of borrowers. A personal loan or a home loan top-up are preferred the options when it comes to quick financial assistance. Here are some of the factors that explain why a top-up loan makes more sense than a personal loan. 

A personal loan is an unsecured loan which is offered without collateral and can be utilised for any financial need. On the other hand, a top-up loan is given over and above the existing home loan without any end-use restrictions. As the lender has already sanctioned a secure loan to you, namely your ongoing home loan, your top-up eligibility can be met with lesser hassles. 

Home Loan Top-Up vs Personal Loan 

Rate of interest

Due to the lack of security, the interest rate for a personal loan is higher than other loan types. Personal loan interest rates range anywhere between 10%–24%, whereas interest rates for top-up loans are only marginally higher, falling between 6%–9%.  

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Another advantage of home loan top up, are their flexible repayment tenors. Personal loans come with a significantly shorter tenor and as a result, lead to bigger EMIs. Most lenders allow the remaining home loan tenor as a top-up loan tenor. In case of personal loans, the tenor is often limited to 5 years.   


The eligibility criteria for a home loan top-up are easy-to-meet and hassle-free. Most borrowers are able to fulfil these with ease, as the lender has already evaluated their profile while sanctioning the home loan or facilitating the home loan balance transfer. Personal loans can come with easy-to-meet eligibility criteria as well but does not ensure such large loan sums.


Both personal loans and home loan top-ups can be leveraged to meet a myriad of expenses. There are no end-use restrictions; which ultimately provides flexibility and makes them one of the most desired financing options. However, a long tenor and a lower home loan interest rate gives an edge to top-up loans. 

Final Thoughts

While both these loans offer a range of benefits, the benefits of a top-up loan on a home loan outweigh the benefits offered by a personal loan. In case you are planning to simply cover the additional expenses which cannot be taken care of with your existing home loan, a top-up loan is your best bet. As the name suggests, it is a top-up facility which boosts your existing credit limit and requires minimal documentation, so if you are in urgent need for funds, you can avail of a home loan with no hassles. 


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