- Renovating your home can be very fulfilling.
- Funding is the key.
- A home improvement loan is cheaper than commercially available loans.
- Other advantages of a home improvement loan are –
- tax benefits
- faster processing
- simple to avail
- flexible usage
A home is not just about a roof over your head. It is much more than that. Your home is your pride, reflecting your status and accomplishment. It’s a pleasure to live in a beautiful house. Aesthetics and comfort matter as much as your home’s location and construction quality. The condition and ambiance of your house creates the much important first impression in the mind of your guests. Make your home a reflection of your personality. You no longer need to wait till you save sufficient funds to renovate your home to your requirement, you can avail of a home improvement loan.
You can avail a home improvement loan to modify, refurbish or renovate your home. The prime benefit of a home improvement loan is that it allows you to upgrade your existing home to a contemporary design and a more comfortable living space, customized as per your tastes and aesthetic preferences. These loans are similar to a house loan. While a home loan enables you acquire a house, home improvement loans are meant for improving the home that you already own.
Why should you opt for a home improvement loan?
Though there are various ways in which you can fund your home renovation, home improvement loans have a few advantages that make them attractive. Here is a look.
Lower interest rates:
While you may avail a personal loan for the purpose of your home renovation, the interest on such a loan is typically high as this is an unsecured loan. A home improvement loan is usually available at the same rates as a home loan, making it an attractive option as it is secured against your home ownership.
A home improvement loan fetches you a tax benefit on the interest component, that is, you can avail a deduction of up to Rs. 30,000 per annum (under section 24) for the interest that you pay on these loans. This deduction of Rs. 30,000 is within the overall limit of Rs. 2 Lakh available on loan interest payment of self-occupied homes. In other words, interest payments on home purchase and home improvement loans put together qualify for a deduction of up to Rs. 2 lakh. The Rs. 30,000 deduction could result in a tax saving of up to Rs. 10,300 thus lowering your overall cost of borrowing.
Home improvement loans entail relatively simple documentation when compared to other modes of financing. All you need is basic documentation like identity / income proof, photographs, property title deed, etc. If you are an existing customer of the housing finance company (you have taken a home loan from the lender), the documentation becomes simpler.
Home improvement loans are processed quickly as the documentation is minimal and hassle-free. So you can get your renovation work started at the earliest without a long wait for your loan application to be approved.
About Home Improvement Loans
Home improvement loans are flexible, hassle-free and a low-cost means of making your home a more comfortable living place. Some key aspects of a home improvement loan are:
Flexibility in usage:
You may utilize your home improvement loan for a range of activities in your home such as renovation, repairs, flooring, extension, painting etc. In other words, you can use your loan funds for any work that pertains to the structure of your home. You cannot however utilize it for repair or purchase of movable items like furniture, fixtures, furnishings etc.
You may apply individually or jointly for availing this loan. If your home is jointly owned, all owners of the property have to necessarily apply for the home improvement loan. However, your family members may become joint applicants for the loan even if they are not joint owners of the house.
The loan tenure can be up to 15 years. Your actual tenure would depend on your profile – your age at maturity of loan, age of your house property, your income, etc. The interest rate is typically the same as the home loan interest rate. Interest rates could be adjustable (floating) over the tenure of the loan or fixed for a specified period. Lenders usually grant existing customers up to 100% of their improvement estimate subject to a specified ceiling on the market price of your home. New customers may however be granted a lower percentage of their estimate, again subject to the limitations on the property value.
Did You Know?
- Interest rate on a home improvement loan is much lower than that on a personal loan.
- You get a tax benefit on interest paid on a home improvement loan.
- These loans can be used for any repairs and renovation to the structure of your home; however, they cannot be used to purchase/repair moveable items such as furniture.
- Existing customers can avail up to 100% of improvement estimate.
- Home improvement loans are available for tenure of as long as 15 years.