Home Renovation Loan

A home renovation loan is one of the best choices to furnish your home with the dream interiors you’ve always wanted. You can use this money for making some essential repairs, or expanding the already existing structure of your house to make more room for people. In addition to this, you can also use this money for renovation or making essential structural changes to your house. 

Some of its features are affordable interest rates, availability of tax benefits, high LTV, and so on. However, prior to beginning with the application process, it is essential to check the eligibility criteria to ensure that you fulfil them. Otherwise, it can lead to the rejection of your application.

In addition to this, you can also arrange the mandatory documents that you would need while filling up your application form. This will ensure a smooth process and minimise the chances of errors. Another factor that you should keep in mind while applying for a loan is that you should verify all the information that you have entered to avoid any errors.

Also, you should perform a thorough comparison between the different kinds and offers of home improvement loans. This is essential to ensure that you select the best option for yourself. This way you can make the most out of your loan to get your dream home interiors. However, without further ado, let’s proceed to get some further details about this credit type. 

Features of Home Renovation Loan

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

• Affordable Interest Rates: The home renovation loan rates are quite affordable. Thus you can save substantially on your monthly outgo, which you can use for some other purposes.

• High LTV Ratio:  Some lenders offer up to 100% of the estimated amount that you quote. However, there exists some capping that you must be aware of before applying for the loan.

• Flexible Loan Tenure: You have the flexibility to select the repayment tenure for up to 20 years. Thus you can select a preferable duration of your convenience, so that you can repay the loan in easy instalments.

• Availability of Tax Benefits: You can claim for tax benefit on your home renovation loan under Section 24(B) of the Income Tax Act. Accordingly, you will be eligible for a deduction of up to ₹30,000 on the interest paid per financial year. 

• Availability of Balance Transfer Facility: This facility allows you to transfer the remaining credit amount to a new lender in case they offer a lower interest rate. This way, you can save more on your monthly instalments. 

• Additional Fees and Charges: Most lenders charge extra during the processing of a loan. As per the set guidelines, this processing fee happens to be about 0.25% to 2.00%. Additionally, some creditors also ask for prepayment charges, in case the borrower decides to foreclose their loan. 

Home Renovation Loan Eligibility Criteria 

The eligibility criteria for home loan are as follows:

Documents for Home Renovation Loans

The documents you need to submit to get approval of a home renovation loan are typically in support of your eligibility criteria. The documents you have to submit with your applications are listed here:

• Proof of Identification: You need any one of these: An Aadhaar Card / PAN card, a driver’s licence (should be valid), a valid passport, or a voter ID.

• Proof of Address: You should have one of the following: any utility bill, an Aadhaar card, a valid driver’s licence, a valid passport, or a voter ID.

• Application Form: You need to submit an application form with all your details mentioned as they are on your eligibility documents, with three passport size photos duly affixed on the form.

• Income Proof for Salaried Individuals: You have to submit salary slips/a salary certificate for the past 3 months, bank statements showing credits of salary for the past 6 months, Returns of Income and the most recent Form 16. 

• Income Proof for Individuals in Self-Employment: Profit/loss statements and balance sheets with schedules of the entity of business (all for the past 3 years) duly validated by a chartered accountant, have to be submitted. Returns of Income and the income computed for past 3 years of assessment of the business and individual have to be additionally given. Furthermore, bank statements of the business and individual bank statements need to be submitted at the time of application of home renovation loans. 

It should be noted that Indians who are not residents have to supply 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

When choosing a home improvement loan you may feel that the process would be tedious and time-consuming, however, by keeping in mind the following pointers the procedure can be simplified and systematic:

• Chalk out your needs for the home improvement loan: First, you need to decide the kind of home loan that you wish to opt for.  Make an estimate of all the changes that are required and then make the budget that would further help you in understanding the amount you would need to borrow.

• Spend time comparing the lenders: Considering all the options for home improvement loans will greatly help you in getting the best deal. When picking a lender you need to check the following:

  1. Fee and charges that are charged by the lender.

  2. Avoid borrowing more money than you need.

  3. You can make use of the home renovation loan interest rate calculator to plan your budget.

  4. The term of the repayment should be one that is convenient to you.

  5. Make sure that you understand the prepayment penalties etc.

  6. In case you are in a hurry to get the loan, make sure the loan disbursal is quicker.

  7. Try going for a lender that offers proactive customer care service.

  8. A good credit score would surely help you get a home improvement loan quickly and easily.

• Keep in mind when you apply for a home improvement loan: Once you have decided on the lender company, 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 Improvement Loans

So far, you would have surely understood what home improvement loans are and how they work. Bajaj Markets help you in getting the best quotes from the leading lenders making your job of finding the right loan very simple and convenient. Once you have found your preferred lender, you can either apply for the required loan via our portal or you can visit the company website for the same. On the home loan page, visit the application section, feed in your requirements and get the best quotes instantly.

The home renovation loan can be applied for either individually or jointly if the owners of the property are ready to become co-applicants. 

Banks and Institutions Offering Home Renovation Loans

Several popular banks and NBFCs provide you a home loan or a renovation loan. Once you have your home renovation loan eligibility criteria and documentation in order, all you need to do is apply for the loan from any of the following reliable institutions: 

• Bajaj Markets Home Renovation Loan: You can take a personal loan from Bajaj Finserv, giving you the benefit of loan amounts up to ₹25 Lakhs to renovate or improve your home. With flexible loan tenures, you can easily pay back loans, and repay home renovation loan interest rate  only on the amounts of the loan that you utilise.

• TATA Capital Home Renovation Loan: You get an interest rate of 10.99% per year with loan tenure of 6 years. The processing fee is a maximum of 2% of the amount of the loan. Here, although the relative interest rate may be high, you needn’t show any collateral when you apply for home renovation loans.

• Bank of Baroda Home Renovation Loan: With a relatively low-interest rate starting at 6.85% per year, you get loan tenure of up to 30 years. The processing fee is 0.05% of the loan amount, and this has to be paid while applying. You get a maximum loan amount of ₹10 Crores and this loan can be taken for renovation, repair or improvement of the present property.

• HDFC Bank Home Renovation Loan: For this loan, interest starts at 7.55% per year, and you get flexible loan tenure of up to 15 years. The processing fee is 0.05% of the amount of the loan or ₹3,000 (any which is higher). For self-employed people, the processing fee is up to 1.50% of the loan amount, or ₹4,000, the higher of the two being applicable. Applicable taxes are charged on the loan and the interest rates are the same as the home loan interest rates. Furthermore, there is no prepayment penalty whether you make partial or full repayments.

• IIFL NRI Home Renovation Loan: This is a house renovation loan scheme offered to NRIs with an interest rate at 8.70% per year. You get loan tenure of a maximum of 20 years. The processing fee is 0.75% of the amount of the loan you take, or ₹3,000 (the higher is applicable). There are no prepayment charges for individual borrowers, but a fee of a maximum of 5% of the amount of the loan may be charged.

This is applicable according to the time after which the last disbursement of the loan was made. Moreover, foreclosure charges apply if you prepay the loan entirely. Besides all this, the application procedure and loan sanction is rapid, and you get a feature-rich scheme. 

Schemes & Offers on Home Renovation Loan 

The different schemes and offers on home renovation loan are as follows:

It's not a bad idea to take a home renovation loan, but you must plan ahead for it. Check recent home renovation trends. This means having your eligibility criteria and documentation in order. According to your individual requirements, if all is in place, you can take a loan for home renovation very easily.