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A home renovation loan is one of the best choices to furnish your home with the dream interiors you have always wanted. You can use the funding for essential repairs, upgrading the structure of your house or expansion. 

 

Home renovation loans come with various features like affordable interest rates, tax benefits, high Loan-to-Value (LTV) ratio, etc. However, before starting the application process, you must check the eligibility criteria and document requirements. 

 

You also should compare different options and offers on home improvement loans. This helps ensure that you select the best option and make the most out of your loan. 

 

Read on to know the features, eligibility criteria, and other details about home renovation loans. 

Features of the Home Renovation Loan

Here are some of the prominent features of home renovation loans:

Affordable Interest Rates

The home renovation loan rates are quite affordable, helping you save on your monthly outgo

High LTV Ratio

Some lenders offer up to 100% of the estimated amount that you quote

Flexible Loan Tenure

You can select a repayment tenure for up to 20 years

Tax Benefits

You can claim tax benefits on your home renovation loan under Section 24(B) of the Income Tax Act, 1961

Balance Transfer Facility

Transfer the remaining credit amount to a new lender offering lower interest rates

Minimal Additional Charges

Lenders levy nominal extra charges ranging between 0.25% and 2.00%

Tax Benefits on Home Improvement Loan

The home improvement loan tax deduction is applicable when the person uses the loan amount to carry out improvement work on his home. This also includes the loan taken for repair work and renovation works like painting & plumbing works.

 

As per Section 24 of the Income Tax Act, 1961, tax exemption is applicable on the interest paid on a home improvement loan. However, this tax rebate on home improvement loans has a maximum limit of ₹30,000 per annum. This rebate will be a part of the overall tax benefit of ₹2 Lakhs available under this section for interest paid on home loans.

 

Do note, that you cannot claim tax deductions on the principal amount paid for a home renovation loan under Section 80C. These deductions are reserved for loans taken to construct or purchase a home.

Home Renovation Loan Eligibility Criteria

While the eligibility criteria for a home renovation loan may vary across lenders, here’s a general list of parameters borrowers may have to meet:

  • Age: You must be between 18 and 65 years of age

  • Employment: You must be either a salaried or self-employed individual

  • Citizenship: You can apply if you are an Indian citizen or a Non-Resident Indian (NRI)

  • Credit Score: Your credit score must be above 700

  • Residence: You can apply for a loan for your permanent or rented residence, where you have stayed for a minimum duration of 12 months before applying

  • Income and Employment: You must have a stable source of income

Documents for Home Renovation Loans

Here are the documents you have to submit with your home renovation loan application:

  • Identity Proof: Aadhaar card, PAN card, driver’s license, passport, or voter ID

  • Address Proof: Utility bills, Aadhaar card, driver’s license, passport, or voter ID

  • Application Form: Duly filled application form with details mentioned on documents, with 3 passport-size photos

  • Income Proof for Salaried Individuals: Salary slips/salary certificate of the past 3 months, bank statements of the past 6 months, ITR, and recent Form 16

  • Income Proof for Individuals in Self-Employment: Profit/loss statements and balance sheets with schedules of the entity of business (for the past 3 years) validated by a CA, ITR for the past 3 years, and individual bank statements 

 

Note that NRIs have to provide similar documents, such as a copy of employment contracts, quarterly salary certificates and statements of bank accounts for the past 6 months. 

Guide for Choosing the Best Home Improvement Loans

Choosing a home improvement loan is an important decision. However, the process can be tedious and time-consuming. Here are some points that you must keep in mind while choosing a home renovation loan:

1. Understand Your Needs 

You need to decide the kind of home loan that you want. Make an estimate of all the required changes to your home and then make the budget that would further help you understand the amount you need.

2. Research and Compare Lenders 

Considering all the available options for the loan will help you in getting the best deal. When picking a lender, consider these points:

  • Check the associated fees and charges 

  • Avoid borrowing more money than you need

  • Use a home renovation loan interest rate calculator to plan your budget

  • Choose a convenient loan repayment duration

  • Check the loan disbursal time to see if you will get the funds when needed 

  • Choose a lender that offers proactive customer service

  • Ensure you have a good credit score since it helps you get the loan quickly and easily

 3. Understand the Application Process and Other Formalities

Once you decide on the lender, you need to start gathering the required paperwork. You can get in touch with the customer care executive online or offline to understand the formalities. You can seek guidance about the loan tenure, the loan options, etc. 

How to Apply for a Home Loan

On Bajaj Markets, you can choose from some of the leading lenders in India. To apply, follow these steps:

  • Click on the ‘APPLY NOW’ option on this page

  • Select your requirement and profession

  • Enter your mobile number and date of birth

  • Check your offers and choose one as per your needs

  • Upload and verify documents

Once you complete the application, you will have to wait for processing and approval. Upon approval, you will receive the sanctioned loan amount in your bank. You can apply either individually or jointly if you want to apply with co-applicants. 

 

Getting a home renovation loan can be a smart decision, but you must plan ahead for it. Check recent interest rates, eligibility criteria and documentation to make the borrowing process easy. 

 

For a convenient home renovation loan application process and other benefits, apply on Bajaj Markets. With a simple digital application, you can get a loan at affordable interest rates and enjoy various other benefits. 

FAQs on Home Improvement Loans

What is a house renovation loan?

This is a financial instrument that creditors provide to offer financial assistance for renovating your home.

How do home renovation loans work?

A home renovation loan is often considered to be similar to a home loan. A renovation loan is a type of loan that you take for uplifting/renovating or repairing your house. 

 

If you fulfil the eligibility criteria, you can get a specific loan amount sanctioned for a particular term. You can repay the loan in this term, along with a specified rate of interest.

What is the maximum loan available for a home improvement loan?

The maximum home renovation loan amount varies from bank to bank and depends on various factors. The maximum loan amount can go up to ₹40 Lakhs or more. Some lenders have an LTV ratio where you can get a portion of the estimated cost as a loan. 

Who is eligible for a home renovation loan?

The eligibility requirement for a home renovation loan varies with different banks. Generally, salaried or self-employed individuals between the ages of 18 and 65 years with a stable income are eligible to apply for a home renovation loan.

What is the maximum tenure for a home renovation loan?

The maximum tenure for a home renovation loan varies with different financial institutions. It can go up to 20 years or more.

What are the tax benefits available on a home renovation loan?

You can get a deduction of up to ₹30,000 every year on the interest component of your repayment instalments for a home renovation loan. This is as per the provisions under Section 24B of the Income Tax Act.

Can I buy furniture for my house with a home improvement loan?

No, you can use the money only for renovating your house and not purchasing furniture or electronics.

What kind of security will I have to provide for a home renovation loan?

You can pledge the house itself or any other property as collateral for a home renovation loan.

When will I be able to get a house improvement loan disbursement?

You can expect the disbursal of the loan amount as soon as the lender verifies the property value and your documents and approves the application. You will receive an intimation from the lender about the same.

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