Houses are made with emotions and sentiments; therefore, people do different things to make them look amazing. It includes decoration items, interesting lights, and renovation when needed.
But even renovating the house is not very pleasant to the pocket. In that case, you can apply for a loan to manage these repairs. A house renovation loan is a secured loan you particularly obtain to renovate the home. Let us delve into why you must get a home renovation loan and how you should apply for one.
Why Settle For Home Renovation Loans?
Home renovation loans have their advantages, such as:
Affordable rate of Interest
One of the most significant reasons people opt for home renovation loans and not personal loans is the availability of these loans at the lowest interest rates. Sometimes the rate can be as low as the home loan interest rate, which can be quite affordable for homeowners.
Higher Loan Amount
Home Loan amount depends on the LTV, i.e. loan value ratio, which means the proportion of a property’s value that can be taken into consideration for a house renovation loan. Many financial institutions offer a high LTV ratio; the best ones exceed 90% of the home value. This is a benefit, as you have ample availability of funds to revamp your home inside and out.
Longer Loan Tenure
Normally, the loan tenure extends up to 15 years, which is quite easy for borrowers to repay. If you want to save on interest and have the funds to repay the loan, you can always opt for prepayment or partial payment of your loan, considering the charges involved.
Income Tax benefits
Under section 24B of the Income Tax Act 1961, you get the benefits of tax exemptions up to Rs 30000 on the total amount of interest paid towards your home renovation loan.
Balance Transfer benefits
If you get the opportunity of a lower rate of interest offered by a financial institution, better consumer services, and other benefits, you can easily transfer your existing house renovation loan to another provider to avail of these benefits.
Lower Charges
Home renovation loans come with lower processing charges and repayment fees as compared to other loan forms. As per RBI guidelines, the prepayment fees are charged on floating loan interest rates. If you have a good relationship with the financial institution, you can even have these charges waived.
How Can You Apply For a Home Renovation Loan?
Before you apply for a home renovation loan, you must ensure that you meet the eligibility criteria:
You should be above 21 years of age and less than 60. Although it is important to be a resident of India to apply for this loan, several institutions also extend their services to NRIs. This loan is available to both salaried and self-employed and can be jointly applied for. Another critical parameter that is considered is your credit score which is built on your repayment history, the potential to pay, and credibility. The higher the rating, the lesser will be the interest rate offered, and the better chances you have of gaining a beneficial home renovation loan offer.
After you meet the eligibility criteria, you can apply directly online, fill out the application form, and submit the necessary documents. You will get doorstep service, where a professional representative will visit you for documentation and verification purposes. All this is a swift process, after which you get instant approval and quick disbursal.
Documents Required for Home Renovation Loans
When applying for home renovation loans, you should be ready with the following home loan documents:
· Home loan documents application form
· Age/Identity/Income/Address proof
· Proof of employment and salary
· Income tax documents
· Financial documents
· Property-related documents
· Estimated repair cost quotation
· Any other document that the financial institution may ask for
Conclusion
Taking a house renovation loan to revamp your house is an effective decision as it provides you with the required funds without draining out your savings. There are times when renovations are long-awaited for years, and one problem leads to another, as there is no arrangement for fixing such issues. A personal loan is a good option, but if you meet the eligibility criteria and can acquire a reasonable home renovation loan, you must consider all its benefits, as discussed above.
