April 18, 2024

Business Bib

Business & Finance Blog

Benefits of Home Improvement Loans 

3 min read

 

A home is a place that represents the lifestyle of its owner, and hence, it is important to keep it functional and presentable. Homes can need alterations from time to time, to take care of worn-out floors and walls. You might also want to improve the appearance of your house to keep up with the changing home décor trends.

If you are short of funds to undertake any renovation work, you can consider applying for a home renovation loan. You can avail the loan for works such as painting, tiling, internal and external plaster, and flooring of the house. Many lenders in India offer home renovation loans to both new and existing customers.

Here are a few benefits of taking home renovation loans

  •   Lower Interest Rates: 

If you take a personal loan to renovate your house, lenders can charge you a high-interest rate. On the other hand, home renovation loans are generally available at the same interest rate as that of home loans.

  •   Easy Processing: 

If you are an existing home loan customer of the lender, then processing becomes simpler for home renovation loans. A rough estimate needs to be worked out citing the plan for the improvements to be made. The lender, on validation of the estimate given, disburses the loan amount.

Lending institutions can provide loans to cover 100% of the estimate for improvement in case of existing customers. The total loan amount or exposure, however, should not exceed 90% of the property’s market value. For new customers, home renovation loans can cover up to 90% of the estimate.

  •   Minimal Documentation:

Compared to other types of loan, home renovation loans can involve minimal documentation. Proof of identity, Proof of address, and property registration and title are some of the documents required. If you have an existing home loan with the lender, they already would have your details, and the disbursement would be immediate. 

  •   Tax Benefits: 

It is a known fact that both the principal and interest components of home loans are eligible for tax benefits. You can enjoy tax benefits on the interest paid towards repayment. In case of a self-occupied house, a loan taken for renovation can be claimed for a deduction on the interest component under section 24 of the Income Tax Act, 1961. The deduction amount can be up to Rs 30,000 per year. 

If the house is rented, then the entire interest can be eligible for deduction. For joint loans taken for home improvement, both the owner and co-owner can enjoy the tax benefits.

  •   Longer Tenure: 

Compared to personal loans and gold loans, home improvement loans have longer tenures. Since home renovation loans can be repaid over a period of of15 years, it gives you ample time to plan your finances and repay in time. 

When you want to upgrade the look and features of your house, home renovation loans can be a hassle-free way to achieve that. If you already have an existing relationship with the lender, you can use it to your advantage and get the loan approved faster with multiple benefits.