Home Loan

Home Renovation Loans: Interest Rates, Charges and Eligibility


There will always be the occasional need for home repairs or reconstruction. Home renovations can include changing the structure of your current home or other major repairs. Understandably, any home improvement project is going to cost a substantial amount of money. You may also need to make other repairs that are important and need to be done right away. When this happens, a home renovation loan can come in handy and keep you from having to use your savings. Banks and nonbanking financial companies (NBFCs) offer home renovation loans that give borrowers a lot of freedom to use their loan amount for various purposes and also give them more time to repay their loans. Furthermore, these funds have longer instalments and lower interest rates compared to other types of loans.

Eligibility criteria for home renovation loans

These are the eligibility criteria to get a home renovation loan:

  • Age: If you are between 18 and 65 years old, you can get a home renovation loan. If you are in this age range, the lender knows that you have enough money to repay your home renovation loan within the set time frame. 
  • Citizenship: You need to be a citizen of India. 
  • Employment: You must have a job with a publicly or privately owned organisation or an MNC that pays you a salary. Having a secure job is considered important to the lender because it proves that you will be able to repay your loan on time with your steady income. If you are self-employed or a business owner, you can also apply for a home renovation loan. The documents required are the same for both salaried employees and self-employed people.  
  • Residence: You must have permanent resident status or a rental home where you have lived for at least one year before applying for the loan.  
  • Credit Score: You need a good credit rating for just about any loan, whether it is a home renovation loan or any other type of loan. Most banks want a score of around 750. A good credit history shows that you can pay back loans on time and do not have a record of defaulting on payments. When deciding if a person is eligible for a home renovation loan, lenders may also look at things like their income, debts, assets, work history, and the stability of their business (if they own a company), among other aspects.

Documents for home renovation loans

When you are applying for a home renovation loan, the lender will require certain documents to be submitted with the application form. These documents are requested to determine whether you meet the lender’s eligibility requirements. These are the documents you need to send along with your application:

  • Identification Proof: You will need identification documents such as a PAN card, an Aadhaar card, a valid driver’s licence, a passport, or a voter’s ID.  
  • Address Proof: You will need documents to confirm your residence, such as electricity bills, a valid driver’s licence, an Aadhaar card, a passport, or a voter ID. 
  • Application Form: You will need to send in your application form with passport-sized photos and supporting documentation. All of your information should be written exactly as it is on your eligibility documents.

Interest rates for home renovation loans

The rate of interest for home renovation loans ranges from 10.5% to 14%. The rate of interest for these loans is lower as compared to other loans, such as personal loans. The repayment period for home improvement loans can be up to 15 years.

Processing fees and service charges for home renovation loans

To process and approve your home renovation loan, the bank may have processing, administrative, or service charges or fees. Usually, this is a small amount, and it differs from one bank to another. Most banks, NBFCs, and housing finance companies (HFCs) charge service fees to both new and current borrowers for home renovation loans. Home renovation loans have processing fees that are between 0.25% and 2% of the total loan amount.

It is important to note that the Reserve Bank of India (RBI) has imposed strict rules on lenders that charge prepayment fees on loans with a variable interest rate. Fixed-rate loans do have prepayment fees, but lenders can choose whether or not they want to charge them.

Features of Home Renovation Loans

These are some features of home renovation loans that are important to know before you apply: 

  • The term of the home renovation loan could range from 5 to 30 years, based on the lender’s terms. 
  • The loan can cover about 90% of the expected cost of the proposed home improvement. 
  • Customers can get loans with either fixed or changing interest rates. 
  • The documentation is simple. 
  • If you already have an existing home renovation loan but come across another lender offering the same loan with a better interest rate, you can transfer your existing loan to the new lender without any hassles.
  • Home renovation loans give people a lot of freedom when it comes to using their loan amount. You can use your home renovation loan to make modifications inside and outside your home, such as adding a room, plastering or fixing the roof, securing leaks, fixing the pipework, and more.


Renovating your home will not only make it more comfortable but also increase its value. With easily accessible home renovation loans, you do not have to worry about getting access to the finances you need to make home improvements. To make sure that your home renovation loan application gets approved quickly, you need to check that you are eligible to apply and prepare the required documentation. For more information on home renovation loans, visit the Piramal Finance website and browse through more useful articles like this one, including information and guidance on loans and more!