Best Offer on Home Renovation Loan This Diwali
All home’s lustre fades and mechanical issues crop up with time. Weather, natural disasters, and old faulty wires can cause problems. Thus, maintaining and renovating your house is necessary. But routine home renovations and repairs are expensive. Prices of materials and labour are on the rise.
So let’s learn more about a simple solution: home renovation loans.
What is a home renovation loan?
A home renovation loan is a loan you can use for different house-related objectives. For example, you are making repairs or upgrades or aesthetic changes. They function like home loans. A home loan buys you a property, while a home renovation loan helps with renovation costs.
There are two main categories of home renovation loans: secured and unsecured.
1. Secured home renovation loans
If you provide an asset as collateral when taking out the loan, the loan is secured. The advantage of this type of loan is that you can borrow more at a lower interest rate and a longer tenure. The interest on this loan is also deductible.
2. Unsecured home renovation loans
This loan is riskier for the lender because it does not have collateral in the form of a house. Smaller loans carry a higher interest rate and must be repaid in less than 10 years. Interest on these loans is not deductible and depends on borrowers’ credit histories.
What are the Eligibility Criteria?
The eligibility criteria for a home renovation loan are comprehensive. They are different for both salaried and self-employed applicants.
What are the criteria for salaried applicants?
- Age: 21-70 years
- Employment type: working in a Government institution, Public Sector Undertaking, Private-Sector Companies, etc.
- CIBIL score
What are the criteria for self-employed applicants?
- Age: 23-70 years
- Employment Type: Self-employed professionals like doctors, CAs, architects, etc. with their practice can apply. Self-employed Non-Professionals, Business Owners, Proprietorship, and Partners of a Partnership Firm can apply.
What documents do I need to submit?
You need to provide proof of all details you provide on the application. These documents need to be attached with your application.
General documents everyone needs to submit.
- Application form with a recent photograph
- Proof of Identity (Passport, driving license, Aadhaar card, voter’s identity card, etc.)
- Proof of Income (Salary Slips of 3 months, bank statement of 6 months)
- Proof of Residence (Passport, driving license, Aadhaar card, utility bills, job card issued by NREGA, etc.)
- Documents for collateral if asked
Documents for salaried applicants.
- ITR for the latest 2 years
- Form 16
Documents for self-employed applicants.
- Last 2 Years ITR / CA Audited Financials Where Ever Applicable
The lender may ask you for additional documentation not listed here.
What are the fees on home renovation loans?
Here are the charges associated with the home renovation loan:
- Processing fees: 3% of loan amount + Taxes
- Part prepayment/pre-closure charges: approximately 2% of the loan amount
- Others such as (EMI reschedule charges, statement charges, and certificate issuance charges): Rs. 500-5000 + taxes (depending on the document/service)
What are the loan interest rates?
Interest rates for home renovations are not fixed but depend on factors such as:
- Your credit history
- The loan amount requested
- The loan term requested
Interest rates for home renovations are lower than those on conventional mortgages.
A fixed-rate agreement and a floating interest-rate plan are available. Before deciding on the best renovation loan, compare the rates various lenders offer. If you have other demands, you will see that some lenders offer tailored services.
What is the after-renovation value?
The after-renovation value of a home is a primary consideration in determining the principal amount of a loan for home renovations. When determining your eligibility, lenders perform some prerequisites. Lenders often look at the estimated worth of a home after repairs and upgrades. As a result, you can get access to larger amounts for home renovation loans.
The only loan offering money based on the future value of the home is a home renovation loan. Home renovation loans are a good funding source. They are also a wise investment because of the rising real estate value.
When should you consider applying for a home renovation loan?
You can apply for a loan if you are sure the property value will increase.
Only borrow money to renovate your home if you are positive it will increase the property value. You can recoup more of your investment in home renovations than you put into them when you sell your house.
You can get a loan to renovate certain areas of your home.
Renovating your attic, basement, bathroom, or front door is an excellent investment. By renovating these parts of the home, you are increasing the value. At the same time, you are not renovating the house. Put your money where it will do the best if you want to increase the resale value of your home.
You are sure the renovation will reduce expenses.
If a repair will reduce your monthly expenses or make your home safer, it is wise to use home renovation loans. Repairs to the roof, siding, and windows fall under this category. They contribute to the weatherproofing and efficiency of your property. If you are sure the renovation is important and will increase the property value, you can apply for a home renovation loan.
Conclusion
A home renovation loan can help you remodel a home without breaking the bank. After verifying your eligibility, you can apply for a house renovation loan. Also, you can improve your loan approval odds by ensuring you meet all requirements.
You should ensure that the loan’s terms and interest rates match your finances. Applying for loans outside your borrowing capacity can create financial risks for you and your family. It is a good idea to consider a cost-benefit analysis before you apply for a home loan.
If you are looking for the best home renovation loan, Piramal Finance is the way to go!