How does a top up loan affect my existing loan?

Opting for a top-up loan does impact your existing loan account in some ways. Firstly, when you take a top-up, the outstanding amount on your running loan increases by the amount sanctioned for the top-up loan. This directly impacts your Equated Monthly Instalments (EMIs) - they will be recalculated and likely be higher to account for the enhanced outstanding loan amount.

Additionally, your existing loan's tenure may change once you take a top-up on it. For instance, if your running home loan had a 20-year tenure originally, the loan provider may restructure it to 25 years when giving a top-up to keep EMIs within repayment capacity based on eligibility and income stability assessments.

Significantly, interest rates applicable to your existing loan do not usually change because you have taken a top-up. The rate remains what you agreed upon with the loan provider during loan origination. However, cross-check contractual clauses or confirm with the lending institution specifically regarding interest rate impacts to avoid surprises.