Owning a home is a dream for everyone. A home not only gives you a roof over your head but also shows your lifestyle. To keep your home looking good, repairs or a full makeover are needed from time to time. In today’s time of rising prices, when construction materials and furniture are so costly, a home renovation loan can be a big help.
What is a Home Renovation Loan?
A home renovation loan is a special loan taken to renovate, repair, or improve your house. It is similar to a personal loan, but its purpose is fixed in advance. While a personal loan can be used for anything, a home renovation loan is specifically for making improvements to your existing house. You can use this loan for anything from small repairs to complete renovations.
Why Should You Take a Home Renovation Loan?
A home renovation loan can be more beneficial than other types of financing. Here are its key features:
- Low Interest Rate: The interest rate on a home renovation loan is usually lower than that of a personal loan. It’s often the same as a home loan interest rate.
- Tax Benefits: You can claim a tax deduction on the interest paid under this loan. Under Section 24 of the Income Tax Act, you can get a deduction of up to ₹30,000 per year on the interest paid. This is part of the ₹2 lakh limit for self-occupied homes.
- Less Documentation: This loan requires less paperwork compared to other loans. Basic documents like identity proof, income statement, and property papers are enough.
- Quick Processing: With fewer documents, these loans are usually approved faster.
Types of Home Renovation Loans
- Secured Home Renovation Loan: This loan is taken by mortgaging your property. Since it’s secured, the interest rate is usually lower.
- Unsecured Personal Loan: If you don’t want to mortgage your house, you can go for an unsecured loan. However, unsecured loans generally have a higher interest rate.
Eligibility Criteria for a Home Renovation Loan
- Age: Most banks offer this loan to people between the ages of 21 and 65 years.
- Income: A stable source of income is required to repay the loan. Your monthly income and existing financial commitments play an important role in loan approval.
- Credit Score: A good credit score (usually 750 or above) increases the chances of approval and helps you secure a lower interest rate.
- Property Ownership: You must own the property being renovated. If the house is jointly owned, all owners need to apply for the loan.
Documents Required for a Home Renovation Loan
- A filled application form
- Proof of identity, income, employment, and residence
- Bank statement of the last 6 months
- Recent photographs
- Original title deed of your house
- No-encumbrance certificate
- Estimate from an architect or engineer for the renovation work
How to Apply for a Home Renovation Loan
- Applying for a home renovation loan is easy and paperless. You can apply through digital platforms like ICiCI online, PNB One. Here’s how:
- Go to the Any Banks App: Find 100% digital and instant personal loan options.
- Fill Out the Application: Enter your details in the application form.
- Submit KYC Documents: Provide identity and address proof.
- Set Up EMI Repayment Plan: Once the loan is approved, set your repayment plan.
Benefits of Home Renovation
Increase in Property Value: Renovating your home can increase its market value, which is helpful if you plan to sell it in the future. Updating spaces like the kitchen or bathroom can attract more buyers.
Improved Comfort and Functionality: Renovation improves comfort, whether it’s creating an open living space or upgrading appliances in the kitchen.
A Fresh New Look: A renovation can bring a new life to your home. It reflects your style and makes your space more comfortable to live in.
Summary
A home renovation loan allows you to improve your living space without affecting your savings. With flexible repayment options and tax benefits, it’s a smart way to upgrade your home while managing your expenses more effectively.