Top-up Home Loan or Personal Loan: Which is a Better Option?

Financial emergencies come unannounced and may be a home repair that cannot be delayed or a medical treatment that you can’t put off. In the absence of emergency funds, you are sure to look to saving schemes you have invested in for required finances. However, the best savings options have lock-in clauses that prevent you from premature withdrawals. Liquidating these investments can adversely affect your returns in the future. So, a good option is to avail a loan to meet your urgent requirements. To this effect, you can either get an urgent personal loan or avail a top-up on your existing home loan. 


Here’s all you need to know about both these options to make a more informed choice.


Basic Features

If you are servicing a home loan then based on your repayment till date, you can access a top-up loan on it, which is an additional loan amount that is sanctioned over and above your home loan. Usually, lenders offer this to you after a year or more of your home loan repayment. The amount you can get as a top-up is often the amount that you have repaid on your home loan so far. This top-up is also secured against your home and owing to its secured nature, the interest charged is likely to be nominal. However, to access a top-up, you will need to have a timely repayment record for your home loan.


A personal loan, on the other hand, is an independent collateral-free loan that you can avail based on your eligibility for the loan. Your sanctioned amount and other terms of the loan will primarily depend on your credit score and income. If you are wondering whether you can increase your personal loan amount, this is usually not the case. However, if you borrow a flexi personal loan from lenders like Bajaj Finserv, you can borrow multiple times from your sanction as and when you need the funds and pay interest only on the amount actually borrowed.



In order to apply for a top-up on your home loan, you should have an existing home loan with the lender. The application process is simple as the lender already has your details. 

In the same vein, you can apply for a personal loan easily too, both online and offline, by meeting the eligibility criteria and submitting minimal documents.



Lenders take 3 to 4 working days to process a top-up loan. Sometimes the processing time can go up to a week. In contrast, a personal loan is approved and disbursed much quicker. Instant personal loans, especially, are approved within minutes. But for that, you need to fulfil all lender’s terms and conditions, such as minimum salary requirements. 


Eligibility criteria

As an existing home loan borrower, the lender doesn’t have complex eligibility criteria for a top-up loan. All you need to have is a good repayment track record for all the years to date. 


On the other hand, to avail a personal loan, you are required to meet all the eligibility criteria the lender mentions. These vary from lender to lender, but the common ones are a credit score over 750, regular source of income, age between 23 and 55. 


Interest rates

Top-up loans are secured by the property in question and thus, charge lower interest rates. However, personal loans are unsecured and may come at a relatively higher interest rate. You can get a competitive interest rate on a personal loan when you have a good credit score and meet the minimum income requirement of the lender. 



You can extend the tenor of a top-up loan to match the remaining tenor of your home loan. So, the tenor depends on when you avail the loan. In contrast, the tenor of a personal loan is relatively shorter and usually between 12 to 60 months.


Keeping these differences in mind, you can evaluate your needs and apply for the right loan. To get either of these loans on favourable terms, it is crucial to maintain a good credit score. If you don’t have a good credit score, start building one by applying for a personal loan. This way, you will also be able to build the discipline of making timely repayments. Look for lenders like Bajaj Finserv to enjoy simple personal loan eligibility criteria, minimum documentation, and quick disbursal on your personal loan. 


Bajaj Finserv offers up to Rs.25 lakh at nominal interest rates on a personal loan.  Apart from low interest rates, personal loans with a flexi loan facility are an added attraction from Bajaj Finserv. This facility helps you save up to 45% on EMI by choosing to pay interest-only EMIs and repaying your principal at the end of the tenor. 


If you’re wondering how to apply for a personal loan, simply visit your nearest Bajaj Finserv branch or apply online. To get an instant personal loan from Bajaj Finserv, check your pre-approved offer online!