Personal Loan

Top Up Loan vs. Personal Loan: Which One is Ideal for Home Furnishing


After one buys a house, one wants to fill it with dining tables, sofa sets, beds, and other things. It makes one feel good and fits their style. 

One can always take out a loan, but it’s hard to find one with a low-interest rate. Over time, the banking field has come up with loan options. They are better for clients and save both time and money. 

If one wants to fix their house, they can choose between a personal loan and a top up loan. But before choosing either one, it’s best to know how they differ and how they can help. Let’s find out.

What is a Top Up loan?

If one already has a home loan, the lender may let one borrow more money extra to what one already owes. “Top up loan” is what the bank calls an additional loan. 

A lender wouldn’t give a top-up loan to every person with a home loan. The loan can be granted to only those with a good history of making funds. So, if one pays on time, one should check to see if this option is available.

Features of a Top Up Loan

  • In general, the loan amount for top-up loans is high. 
  • They are usually taken for a long term of 20 to 30 years. 
  • The interest rate on top up loans is low. 
  • The lender keeps property deeds as security.
  • After the person has paid back the loan in full, they can get the house’s deeds.
  • The lender can sell the property if the person doesn’t pay back the loan before it’s due.

Features of a Personal Loan

  • Personal loans are small loans that usually don’t exceed Rs. 25-30 lakhs. 
  • The length of a loan is usually between 12 and 60 months. 
  • The interest rates on top up personal loans are lower than those on personal loans.
  • The borrower doesn’t have to put up anything as security for these loans.
  • Personal loans are used to pay for high or sudden costs. This includes medical bills, a wedding, college tuition, a trip, or home repairs.
  • Personal loan eligibility rules are stricter. Lenders usually only accept people with a good credit scores and credit history.

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

Here are a few things one should think about before deciding on the best loan for their needs:

  • Loan Interest Rate

A top-up loan on the existing house loan can be taken. The most crucial benefit of choosing this sort of loan is that it has a lower interest rate. This is because the lender views the home as collateral and does not require one to provide extra security. As a result, one can get a lower interest rate of around 10%. 

A personal loan, on the other hand, is an unsecured loan. It means one doesn’t have to furnish any security. This allows the lender the authority to levy a higher interest of 12%-16% or more. This, as a result, leads to hefty equated monthly payments or EMI levels.

  • Tenure of the Loan

A comparison of a top-up home loan vs. a personal loan isn’t complete unless one talks about its length. Most home loans have terms of 20 years and sometimes longer. If one takes a top-up loan, one can extend the time they have to pay it back. But, the amount of the EMI could also change. One can get a personal loan for up to 7 years. They have to pay it back within that time. Due to this, it is vital to consider the loan term before applying for either loan.

  • Loan Rebate Period

A personal loan is the best one if one needs money within a few hours. Most lenders today offer instant personal loans. The money is deposited into one’s account within 2-4 hours with minimal documents. One can get a personal loan if one needs money right away. But if the person has a few days to manage, it’s better to wait and get a top-up loan with a lower interest rate. 

Since a top-up personal loan is a type of home loan, the lender needs to look at the current home loan again. If the person has been making his home loan payments on time, they should have no trouble getting this additional loan within 24 to 48 hours.

  • Application, Loan Approval, & Other Fees

People with a good history of paying back loans and credit scores can easily get top-up personal loans. They will not have to go through the application and approval process. It may take longer and be more difficult. The lender will first make sure the person is eligible for a personal loan and check documents before giving the loan. On the other hand, if the person needs money quickly and has all the proper documents, they can apply for a personal loan online. They will get the money within 48 hours (subject to eligibility).

Getting a top-up on one’s home loan could take a while. It depends on how well the person knows the lender and how eligible one is. It also includes the debt-to-income ratio.

  • Simple Documentation

When a person applies for a top-up personal loan, the bank will already have all of the required documents. This is because the person had provided them when they applied for a home loan in the first place. If the person chooses an add-on loan, the document process is simplified and less time-consuming. On the other hand, a personal loan will require the person to fill out many forms and submit multiple files.

Overall, the person can decide which loan is best for them by keeping the above factors in mind. 

Processing Fees on Top Up Loans

The processing cost for a standard home loan also applies to the top-up. As a result, it will differ from lender to lender. The charge typically ranges between 0.35% and 1% of the loan amount given.


Opting for any type of loan depends on what a person needs. If a person needs a loan to fix up their house, a top up loan would be the best choice because it would give the person more money to work with. So, before making a decision, one should go to their bank and talk to them about the different types of loans available.

Visit Piramal Finance to learn more about various types of loans and explore different products and services.