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Which is better — Top-up Home Loan vs. Balance Transfer?

By IIFL Home Loans | Published On Jan 30 2024 5:59 AM 1 min read 43 views 4949 Likes
Balance Transfer

Already have a home loan but need more funds?

Well, it's not uncommon that sudden financial needs might arise requiring you to avail of loans. However, when you already have a home loan running, then you don’t need to go for expensive financing options like personal loans or credit card facilities. You can seamlessly apply for a top up loan on home loan. However, many borrowers are not satisfied with their existing lenders. In such cases, Balance Transfer emerges as an attractive option. But, what are the home loan balance transfer and top up facilities? Which one is better? Let’s find out!

What are Top Up Home Loans?

The Housing Loan Top Up facility allows you to borrow additional funds over and above your principal home loan. You don’t need to provide any additional security for the home loan top up as your existing home acts as the security for top up of home loan as well. As top up loans are also a form of secured loan, therefore, the top up loan on home loan interest rate are affordable as compared to unsecured lending options.

What is Home Loan Balance Transfer Facility?

Home Loan Balance Transfer facility allows you to change your existing lender. Suppose you are not happy with the services of your existing lender, you can opt for a Balance Transfer Facility with a new lender. In this case, the new lender will pay your principal outstanding with the existing lender. Now, you will have to repay your loan to the new lender. You can also opt for a higher loan amount with the new lender through Balance Transfer plus Top Up facility.

Difference Between Top Up Loans and Balance Transfers

There is a significant difference between the top up loans and balance transfers (with or without top up). These include:


Top Up Loans

Balance Transfer

Loan Amount

The principal loan amount remains the same. Further, an additional loan is granted in the top up facility over and above the principal loan. Here, your lender does not change.

Your principal loan amount gets transferred to the new lender. In case you need to apply for a top up, you can ask the new lender to grant top up facilities as well.

Terms and Conditions

The terms and conditions essentially remain the same as per the policy of the existing lender.

The terms and conditions as per new lender apply to both your principal loan as well as top up facility.


EMI of the principal home loan continues as before. For a top up loan facility, a new EMI begins with a different tenure than your principal home loan.

Your EMI might change if you apply for the balance transfer due to a change in interest rate and tenure with the new lender. Further, balance transfer with top up facility won’t have two separate EMIs.

Loan Tenure

The tenure of your principal home loan remains the same while you are free to determine the tenure of your top up loan. The tenure for top up loan will vary depending upon your loan amount and your preferences.

Most lenders provide the borrowers with an option to change the loan tenure in case of balance transfer (with or without top up facility). Thus, you can increase or decrease your tenure based on your preferences.

What you should select – Top Up or Balance Transfer?

Whether you should select top up or balance transfer depends upon your preferences and experience with your existing lender. If you are not satisfied with your existing lender’s services, then balance transfer is a viable option because home loans are of a longer duration. Further, you can also benefit from the reduced home loan balance transfer interest rate that many new lenders provide. Top up facility comes in handy in case of balance transfer facilities.

Choosing the Right Lender

Choosing the right lender is crucial for having a good borrowing experience. IIFL Home Loans are a preferred choice amongst borrowers for affordable interest and flexible terms. You can also opt for a balance transfer facility to reduce your per month EMI, change the loan tenure or avail of top up loan transfer facility. If you wish to balance transfer your home loan but are concerned about EMI, you can calculate your EMI in advance using the IIFL Home Loan EMI calculator. Apply for a Home Loan Balance Transfer now!

Frequently Asked Questions

Q1: How to use a home loan EMI calculator?

A: After opening the home loan EMI calculator, you just need to enter the loan amount, tenure and interest rate. You will get the exact loan amount and interest you will have to pay over the tenure of the loan.

Q2: What are the purposes for which we can avail of top up home loans?

A: Top up on home loans comes with unrestricted end-use. You can use the funds for home renovation, medical needs, education etc.

Q3: Is top up loan merged with a home loan?

A: No. Top up loans are not merged with home loans but are granted separately. Thus, it has a separate EMI based on the tenure of the top up loan.

Q4: What is the interest rate on top up home loans?

A: The top up loan interest rates are similar to that of home loans.

Q5: Is balance transfer a good option?

A: Yes. Balance transfer is a good option to reduce your interest rates, change your loan tenure or avail of top up facility.


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