Buying a home is a dream-come-true experience for most people across the globe. Having a home with your name and complete ownership gives you a sense of accomplishment and authority. However, sometimes you don’t need to purchase another home. You can make that work if you already have a house. A certain advantage is that it will provide you with readymade shelter in no time and prevent you from a huge financial investment.
Sometimes, the condition of your house might need a touch-up and buying a new house is not the right substitute. And to make that happen, you need a lump sum to improve the aesthetics. So, people tend to take a home improvement loan instead of going for a home loan. A home renovation loan can also give you the experience of living in a new house. You can use the loan amount to upgrade your house’s existing features, upgrade the design, and increase comfort.
In today’s article, you will learn about home improvement loans, their benefits, their eligibility to apply for them, and the process of applying for them.
What is a Home Improvement Loan, and What is Its Significance?
Like financial assistance, a home improvement loan is financial assistance that you borrow from a lender for a specific period in the promise to repay the loan amount. The lender charges you a specific rate of interest within which you are bound to repay the loan. These loans are very different from home loans, where you can upgrade the existing features of your home rather than go for a new one.
This loan amount can be used to level up your house’s external and internal features. You can use it for various purposes like tiling, flooring, painting, sanitary work, etc. In India, most home renovation loans are flexible and have low-cost options to increase the borrower’s repaying capacity.
Now that you know the meaning of the home improvement loan and its significance, you should know about some of its benefits.
What are the Benefits of a Home Improvement Loan, and Why Should You Take It?
There are plenty of benefits to taking a home improvement loan, and some of them are as follows:
- Low rate of interest:
The interest rate on most home renovation loans is quite low to help you easily repay the debt. The interest rate varies from lender to lender and depends more on the borrower’s credentials and the financial muscle to tackle the instalment payments. The interest rate for a home improvement loan in India is similar to that of a home loan and starts from 6.85% per annum.
- Lower EMI amount:
Another striking benefit of going for a home improvement loan is that you will have to pay a lower EMI amount. A low EMI amount will add no financial distress to your monthly budget, making the entire process less painful. You can easily repay the loan amount without going overboard.
- Less paperwork:
Many banks and other lending institutions do not entertain rigorous paperwork to avoid unnecessary delays. You will be asked for a few legal documents and have to carry out fewer formalities.
- The long tenure of repayment:
The tenure of repayment of a home improvement loan can be as long as a home loan. In many cases, the term to repay the loan for the home renovation can go up to as high as 30 years.
What are the Minimum Eligibility Criteria to Go for a Home Renovation Loan?
Here is the eligibility you require to go for a home improvement loan:
- You should have at least completed 18 years of age and should be less than 65 years old to get a home renovation loan. You can both be a resident or a non-resident Indian to apply for a loan for renovation. You can be salaried or self-employed and must either have a permanent or a rented residence where you have lived for at least 12 months.
- You should also have a decent credit score, more than 700, while going for a home improvement loan. You can either apply for the loan as an individual or jointly, depending on the ownership of the house.
How to Go for a Decent Home Improvement Loan in India?
The process to get a home improvement loan in India is quite simple; you need to focus on these parameters:
- Setting a home renovation loan goal
Though you can get a higher loan amount which can go as high as INR 25,00,000, you should have a clear goal with what you will do with that money. Since you have to carry out the borrowing cost of the loan, you should take what’s essential instead of going for a huge amount. For example, if you want to convert the house’s attic to a small room or paint and tile your house, you can take as much as required.
- Explore all the home improvement loan offers
In India, plenty of lending institutions provide low-interest rates, low-cost EMI options, and high loan tenure. So, while you are applying for a home improvement loan, you should compare all the offers and choose the best one.
- Find a lender who has easy eligibility criteria
Search for a lender who is less demanding in the eligibility section of a home improvement loan. The eligibility criteria for such loans are complex compared to other types of loans available in the market. See if you can sneak into the easy eligibility category to get a better deal.
The Bottom Line
Renovating your existing house is better than just buying or building another one. You can add some aesthetics to your home by painting, tiling, following, furniture, etc. In that case, a home improvement loan is a better preference than a home loan. It will add less financial stress and will help you keep the advantage of already having a suitable location.
You can use a home loan calculator to compare different interest rates provided by lenders to choose the best one for you. To learn more about home renovation loans, you can visit Piramal Finance.