Are you depressed at the sight of your home falling apart with peeling paint and damp patches on the walls? Is your furniture well past its “expiry date” or is your house in a sorry mess? As you may know, banks provide loans for various reasons. They also give loans to spruce up your home.
Home Improvement Loan is…
Every scheduled bank and other financial institutions like NBFCs offer some form of loan for home improvement.
Home improvement loans can be taken by any individual subject to certain eligibility criteria. These loans are given for the sole purpose of renovating the individual’s property.
The interest rates for these loans can vary from bank to bank or from financial institution to financial institution. Interest rates are starting at 11.99% p.a. Similarly, the maximum loan amount also varies, and the repayment tenure could be anything from 1 year to 5 years.
Given below is a sampling of the interest rate, max loan disbursal, and repayment tenure of some of the banks and financial institutions that offer loans for home improvement.
Secured and Unsecured Loans
Loans can be secured or unsecured. In the case of secured loans, the applicant has to mortgage some fixed assets like land, house or apartment. Some banks and financial institutions also accept gold jewellery. In unsecured personal loans, the bank gauges the applicant’s ability to pay back the loan. Each bank has its eligibility criteria to decide whether the borrower can pay back the loan.
Checklist For Applying For A Loan
Your age should be over 21 years and below 65 years
Should be salaried or self-employed
Applicant should be an Indian resident
Loans are available to any gender
– Helps in maximizing loan amount
– Get a better interest rate if the co-applicant is a female
– Female co-applicant need not be the owner
(Few financial organizations or banks don’t offer this option, pleased o check this with your lenders before applying of the loan online)
While applying for a loan online also take into account charges like
(Apparently, there are no such preprocessing fees, if you apply via Buddy Loan.)
We can estimate that It is advisable to research and compare the offers until you make the final decision. Some websites will offer you multiple options and will also show you a comparison chart.
Home Improvement Loan without a PAN card.
A PAN card comes under the KYC category. Expanded as Know Your Customer, KYC documents serve as a way to identify and verify a customer for banks and lending institutions Availing a loan through loan aggregators can suffice your financial needs with a PAN card. It is mandated that any loan is to be approved over PAN details. Moreover, Buddy Loan encourages the borrowers to keep their PAN card handy while applying for a loan.
Documents Required For Home Improvement Loan
Different banks have different requirements. The following is a list of the general set of documents that may be required by all banks for furnishing your loan improvement loan.
- Application form for the home improvement loan. Passport size photographs.
- Salary receipts of past 3 months along with Income Tax Return or Form 16.
- Bank statements for the last 6 months.
- For self-employed people, IT/ITAO copies.
- Property title copies
- Renovation estimates. A qualified and registered architect’s estimation of renovation certificate. The certificate covers types of expenses and overall estimated expense (including labour).
- Address proof and identity proof. Can be any of the documents from the KYC list. For address proof, passport copy can be given. For identity proof, AADHAR card or voters ID can be given.
Minimum And Maximum Age For Availing Home Renovation Loans
Most banks want the applicant to be at least 21 years of age and not more than 65 years of age. The upper limit is however dependent on the bank. Few banks could have a higher upper limit such as 70 years.
Usage of a home improvement loan
Home renovation applies no restrictions on how the loaned money is utilized. This is unlike home loans or home construction loans. In these loans, the amount is given only in phases sometimes. That too after providing images of the completed construction.
In the case of home renovation loans, the money can be used for flooring, re-tiling, re-roofing, re-painting, extending the home, and even purchasing decorative items. Repair, restoration and any sort of refurbishment activities can be done with this loan.
The best way to use this loan is to avoid purchasing non-essential decorative items.
- It is best to focus on repair, restorative work first. Making the home strong, durable and safe should be given the utmost priority.
- If there are surplus funds, consider planning a repayment rather than wasting money on decorative items.
- Logic has it said that decorative items must be purchased with one’s surplus income and not from a home improvement loan!
Home Improvement Loan and Interest Rate!
Renovation work is a bare necessity for homes after a certain time period. Repainting, paneling, and reinforcing structural integrity help maintain the durability of a home. However, loan aggregators help you with the best repayment options for a good 5 years. Explore Buddy Loan in order to reap more benefit for a home improvement loan.
Home improvement finance can also be used for beautification purposes – making the home look prettier, cosier, increasing conveniences etc. Almost every bank offers home improvement loans. Interest rates starting at 11.99%p.a. or lower depending on the CIBIL/Credit score.
Features of home improvement loans
- Unlike a decade ago, home renovation loans are paperless. The process is completely online. Disbursal of loan is within 72 hours.
- There are secured as well as unsecured loans. Secured loans need collateral. The loan amount could be higher than unsecured loans. No collateral or security deposit is required for unsecured home refurbishment loans.
- Tax benefits can be availed on home alteration loans. The tax deduction is on the interest paid. Under Section 24 of the Income Tax Act, Rs. 30,000 tax deduction on interest can be availed.
Home Improvement Loan Tenure
- The minimum repayment tenure is 60 months. The maximum tenure can be up 60 months.
- Loan tenure cannot be chosen. Even if requested, only a few choices are given. For example, if a person wants 15 years repayment period, the bank may or may not offer this repayment tenure.
- Loan repayment tenures are decided by the bank or lending institution. It is dependent on several factors. The borrower’s age at the maturity of the loan is the main determinant. The other determinants are the age of the home, and income of the borrower at loan maturity.
Is it better to choose fixed or floating rate interest home refurbishment loan
- In floating rate home renovation loans, interest rates are automatically adjusted as per prevailing market conditions. This is advantageous as well as has its disadvantages. It is advantageous when the interest rates dip.
- Fixed interest rates do not change.
The better option would be to go for fixed interest rate loans. This is because inflation is always on the high side from the past several decades.
- For salaried people, their eligibility will depend on their net take-home salary after income tax deduction.
- A very bad credit score may not fetch a home improvement loan. An average credit score can still get a home renovation loan, but the loan amount may not be as high as desired.
Home improvement loans are a type of personal loan product. But they have slightly lesser interest rates given that they tend to the home sector. This aspect overlaps this category of loans between home loans and personal loans, making them a unique loan product.
Getting a Home Improvement Loan is now easy!
You have had the same furniture over the years, and you feel you need to change into something more modern as well as renovating your house. However, you feel there is no strong financial muscle to help you do that. Worry not, as we are here to help you through that. Buddy Loan app, one of the best aggregators can help you avail a loan easily.
We advance loans from as little as 1000 to 15 lakhs with a friendly interest rate starting at 11.99% p.a. You also get a flexible repayment period that ranges from 3 months to 5 years. When you approach a lender for a loan in India, you receive advice on the best tenure options.
Documents needed to consider when applying for a Home Improvement loan
- Age – You have to be of a minimum of 24 years and a maximum of 70n years of age when applying for a home loan. You can submit proofs such as the birth certificate or your pan card.
- A Proof of address- This can be proven by having a utility bill or receipts that show your address.
- Existing loan documents if any
- Property ownership documents to be used as security for the loan.
- A well-filled loan application form.
Types of Home Improvement Loans
- Credit card
- Personal loans
- Mortgage refinancing
- Home equity loan
Process of applying for the loan
Step 1: Before settling on the loan provider, you must have checked and evaluated your eligibility. When you can assess the loan amount, you can decide the loan tenure and possible EMI that are comfortable for you.
Step 2: Get to know your loan offer. When you check through the banks and get to know your eligibility, you will also get to know what your loan offer is. You will also get to see the interest rates, the payment periods, and the tenure.
Step 3: You will need to fill a personal loan application form and submit. You can do this by visiting the loan lenders’ office, or if you are applying for a personal loan online, you can send an online application.
Step 4: Submit your documents to the bank for approval. The loan provider representative will call you for the verification process, and after that, they will call you for a sanction letter. The sanction letter will in detail give all the necessary information about the loan.
Step 5: Disbursal. The amount in the sanctioned letter will be credited to your account, and you can now proceed with your plans.