Loan for home improvements – It is a privilege to own a home during these tough times, but the management part of it can, sometimes, feel daunting and challenging as it requires money. There are times when you need to repair the windows, rooftop, or replace one of the doors, but it becomes heavy on your pocket to bear the cost of repair and renovation.
Instead of using the savings or prematurely withdrawing important investments, home improvement loans can save you from further financial burdens. They are loans towards the renovation of residential properties like emergency repairs, flooring, roofing, plumbing, painting woodwork, etc.
Hence, home renovation loans can prove to be practically helpful given that you have the repayment capacity to pay equated monthly installments. The underlying points should help you understand everything before opting for a home renovation loan.
Making your mind about the required loan amount
First of all, is it imperative to make a list of things you need for renovation and then prepare a cost estimation. It can include things like whitewashing, changing furniture, or repairing them.
When you have the cost estimation, you need the exact amount you need as a loan. You can request an expert to help you make the right estimate. Also, decide on how much of the renovation cost you can manage to pay from your pocket.
Eligibility Criteria
After deciding the housing loan amount that you need, check whether you meet the eligibility criteria to get that amount. Although, the requirements to avail of home improvement loans are simple and accessible. If you meet the below criteria, you are good to go.
- Applicant must be a citizen of India.
- Must be 21 years or more at the time of application.
- Must be 65 years old or less at the time of loan maturity.
- Applicant must be self-employed or salaried
Find the best interest rate for yourself
Lenders, these days, offer two types of interest rates, fixed interest rate, and floating interest rate. A fixed-rate of interest is when the interest rate remains constant through the housing finance tenure, whereas a floating loan is subject to changes as per the lender’s and regulatory authorities’ policies.
Find banks or NBFC companies that offer the longest repayment period with zero or fewer miscellaneous charges. You can always negotiate to obtain a lower interest rate loan but be mindful of the fact that the final interest rate on a housing loan in India wholly depends on credit history and repayment capacity.
Documents needed
Before applying for a home improvement loans scheme, keep all the relevant documents ready. It is better to choose a lender that provides a hassle-free documentation process.
The documents required to apply for a housing loan in India are:
- Address proof: You can furnish one of these documents – Passport, Voter ID card, Ration Card, Driving license, rental agreement, or electricity bill issued within 3 months.
- Identity proof: Same as the documents required for address proof.
- Self-employed Person: Bank statement showing transactions from the previous three months
- Salaried Person: three months salary slip with ITR.
Upon failure to provide the aforementioned documents, your application for a housing loan in India will be rejected.
Carefully plan loan tenure and monthly installment amounts
The last important factor you need to remember before is the repayment tenure. Home renovation loans allow borrowers to pay the loan amount along with the interest rate within a maximum of 5 years. You have to carefully plan to repay the amount on time.
Most loan providers have online EMI calculators. A loan EMI calculator helps to determine the monthly installment amount, interest rate, and loan tenure. You can use it to make an estimate and select a feasible loan tenure for yourself to pay monthly installments on time.
In summary
Every home requires maintenance work at some point. You may need painting, remodeling, repair of broken furniture, doors, windows, or rooftop. Complete care and attention are demanded to avoid having a broken and unkempt house. Within the increasing cost of labor and renovation services, a home renovation loan can help you manage your expenses. However, before applying for a home renovation loan, always factor-in the loan amount you need, eligibility criteria, rate of interest, documentation, and loan tenure to make an informed decision.
