Having a home of your own is one of the biggest life goals of many individuals. A home is a place that always gives you comfort and joy, and it is essential to take regular care of your home. Home renovation is costly, but with the right home renovation loan, you can maintain your home to your standards.
Today, we shall look at the process involved in getting a home renovation loan.
Reasons for Home Renovation
Home renovation is suggested when you want to change the aesthetics of your house. This can also be considered an investment to improve the resale value of your house.
A home renovation loan gets you a lump sum amount. And with the long tenure and the cheap interest rates, you can renovate your home under the budget.
What is a home renovation loan?
As the name suggests, a home renovation loan is a specifically designed loan that gives you funds to renovate a house. Through this, you can repair your house, improve its sale value, add new interiors, and design an interior that matches your tastes. Only people with an existing house can avail this loan.
Reasons to opt for a home renovation loan
A home renovation loan is the right financial choice if you’re looking for a costly home renovation. Let us look at some of its advantages that make it a solid deal.
Cheap Interest Rate
A home renovation loan uses your house as collateral. Its interest rate is relatively cheaper than any other loan. The interest rate of a home renovation loan is around the range of 8.49% per annum to 9.00% per annum.
Save Taxes
When you opt for a home renovation loan, you become eligible for a tax deduction of at least Rs. 30,000 per annum. This deduction will also depend on the interest rate of your home renovation loan. So you can have the house of your dreams and save money.
Flexible Usage
You have absolute freedom to use your funds according to the needs of your house. It does not matter whether you are changing the interior decor, adding a new wall, a new room, or changing tiles. Everything in this spectrum comes under the home renovation loan. As long as you are using the funds to renovate your home, you can use it any way you want.
Long tenure
Home renovation loans have a long tenure. It means you have ample time to repay the loan amount. Depending on the loan amount and the interest rate, you will have up to 15 years for repayment.
Documents Required for a home renovation loan
Before applying for a loan, ensure all the essential documents are with you. These documents include the following:
-
- A filled application form from the bank
- Original papers of your house
- Proof of identity
- Proof of residence
- Proof of employment and income
- Your previous six months’ bank statement
- The estimated cost of your home renovation work, done by an architect/engineer
- The cheque for the Home Loan processing fee
Steps involved in getting a home renovation loan
The basic steps involved in applying for a home renovation loan are as follows:
- Estimate the fund you need for the renovation work. Work on it with the help of an engineer/architect and get it signed by them before submitting it to the lender.
- The technical department of the bank will evaluate your estimate and decide on approving your loan.
- Sometimes, even if the estimate is correct, the bank does not approve certain costs, resulting in lower funds. Usually, a bank provides you with around 85-90% of your estimated value.
- Submit the duly filled form with the required documents to the lender.
- And once the loan is approved, the amount will be disbursed to your account.
Read a Similar Blog: How to Calculate Eligibility for Home Loan?
