Home Renovation Loan: A quick guide on availing loan for home makeover
24 October, 2024 | 11:01 IST
Owning a property is a big accomplishment in life but a home is more than just a roof over your head. It also becomes a reflection of one's social status and lifestyle. Over time, residential properties require some repairs or complete makeovers to maintain their charm. With the rising cost of construction materials, furniture and interior décor items, you may have to shell out a huge amount for renovation at times.
Fortunately, a home renovation loan can provide the financial support you need to create the living space of your dreams. Read on to learn more on how such loans work, their benefits and the documents required to get started.
A home renovation loan is designed to help homeowners fund improvements, refurbishments or modifications to their existing properties. It’s similar to a personal loan but the purpose of the loan is predefined by the lender. Unlike a traditional home loan, which is used to buy a new property, a home renovation loan is aimed at improving the home you already own. These loans can cover a variety of purposes, from minor repairs to extensive renovations, allowing you to tailor your living space to suit your tastes and lifestyle.
Opting for a home renovation loan offers several advantages over other financing options. Here are some key reasons why you should consider this type of loan:
Lower interest rates: Compared to personal loans, which often come with higher interest rates due to their unsecured nature, a home renovation loan usually offers rates similar to those of home loans. This makes them a more cost-effective choice for financing your renovation project.
Tax benefits: One of the most appealing aspects of a home renovation loan is the potential tax deduction on the interest paid. Under Section 24 of the Income Tax Act, you can claim a deduction of up to ₹30,000 per annum on the interest portion of your home renovation loan. This deduction is included within the overall limit of ₹2 lakh available for self-occupied homes, resulting in possible tax savings of up to ₹10,300.
Minimal documentation: Obtaining a home renovation loan generally requires less paperwork than traditional financing methods. Basic documentation such as identity proof, income statements, photographs and property title deeds are usually sufficient.
Quick processing times: Due to the streamlined documentation process, home renovation loans are often approved and processed quickly. This means you can get your renovation project underway sooner without prolonged waiting times.
Secured home renovation loans: These loans are secured against the value of your home. Because they are backed by collateral, they usually come with lower interest rates.
Unsecured personal loans: If you prefer not to attach your home to the loan, an unsecured personal loan is an alternative option. While interest rates may be higher, these loans do not require any collateral, making them a safer option for some borrowers.
For a home renovation loan, generally, the following factors are considered:
Age: Most lenders prefer borrowers aged between 21 and 65.
Income: A steady and sufficient income is essential to ensure timely loan repayments. Lenders typically consider your monthly income and existing financial commitments.
Credit score: A good credit score (usually 750 or above) can improve your chances of loan approval and secure a lower interest rate.
Property ownership: You must be the owner of the property being renovated. If the home is jointly owned, all owners must apply for the loan.
Documents required for home renovation loans
When applying for a home renovation loan, you will need these documents:
A duly filled application form
Proof of identity, income, employment, and residence
Last six months’ bank statements
Recent photographs
Original title deed of your home
No-encumbrance certificate
An architect or engineer’s estimate for the renovation work
How to apply for a home renovation loan
Applying for a personal loan has become quite convenient with the complete paperless process provided by many lenders. You can avail the facilities offered by digital platforms like Moneycontrol and apply for a personal loan through their app or website a 100% paperless process. The amount can be used for home renovation.
Visit Moneycontrol app: Go to the MONEYCONTROL app or website, where you can find options for a 100% digital and instant Personal Loan.
Enter your personal details: Fill out the required information in the application form.
Complete KYC: Submit your Know Your Customer (KYC) documentation, which includes identity and address proofs.
Set up EMI repayment: Once approved, set up your Equated Monthly Instalment (EMI) repayment plan.
Moneycontrol offers access to instant loans up to ₹15 lakh through its partner banks and non-banking financial companies (NBFCs). Depending on your employment status, you can choose between personal loans and business loans, all through a 100% digital process. Interest rates start at 12% per annum, and there are no hidden charges.
Here are a few benefits of embarking on a home makeover:
Increased property value: Renovating your home can substantially increase its market value. This is beneficial if you plan to sell the property in the future. By modernising key areas such as the kitchen or bathroom, you can attract potential buyers and command a higher price.
Improved comfort and functionality: Home renovations can lead to improved comfort and functionality. Whether you’re creating an open-concept living space or upgrading your kitchen appliances, these changes can make daily life more enjoyable and efficient.
Enhanced aesthetic appeal: A fresh look can breathe new life into your home. By personalising your space through renovations, you create an environment that reflects your style and tastes, making it a more enjoyable place to live.
A home renovation can not only enhance the aesthetics and functionality of your living space but also provide a significant boost to your overall well-being. With the availability of hassle-free home renovation loans, transforming your home into the sanctuary you’ve desired is more achievable than ever.
Summary
A home renovation loan helps you transform your living space without dipping into your savings. With flexible repayment tenure and potential tax benefits, it’s a smart way to upgrade your home while managing your expenses effectively.
Disclaimer
This piece/article was written by an external partner and does not reflect the work of Moneycontrol's editorial team. It may include references to products and services offered by Moneycontrol.
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