Owning a house is something that most people dream of for years. If you are staying in a place that’s you own, you and your family are living the Indian dream! To keep your house in tip-top shape and/or to make additions to the existing property, it is important that you carry out periodic renovations and remodeling projects.
Your house may need a new coat of paint, or new tiling. You won’t always have enough savings to pay for your home improvement projects as and when they spring up.
The best way to go about this, then, is to take a Home Improvement Loan. You won’t have to put off the renovation due to any financial constraints. You can take the loan, and repay it in easy-to-pay monthly installments.
So What Exactly is a Home Improvement Loan?
A Home Improvement Loan is a loan specially designed for homeowners to use in renovating, restoring, maintaining and improving their home. This loan is given out for properties that are fully constructed. With this capital, you can construct a new room, remodel the kitchen, build an overhead water tank, redo the floors, or extend a balcony.
The loan eligibility criteria aren’t very stringent. To get a loan for a residential property, the place must be in your name. You can get more info about the eligibility criteria for personal loan online.
Before applying for a Home Improvement Loan, calculate the estimated cost of the project. Once you have decided on your budget, submit your plans to the bank.
Now that you know what a Home Improvement Loan is and what it is used for, let us take a look at why it is a good idea to invest in one right away:
No Cash Crunch
When you renovate your home, it adds beauty, space and convenience to your property. It also increases the life of your house, as well as its value in the market.
Unfortunately, even when a house needs renovations, the inevitable is delayed because the homeowner simply doesn’t have enough savings to cover the expenses. Taking a Home Improvement Loan gives you access to a lump sum of money to pay the repair company for any renovation tasks.
You can then repay the loan to the bank in easy monthly installments. This will help ease your financial burden as you won’t have to shell out a huge sum of money all in one go.
Interest Rates and Choices
Many banks let you choose between fixed and floating interest rates; letting you decide which plan best suits your needs. If you go for the fixed option, interest rates remain the same throughout the tenure. On the other hand, a floating rate is dependent on the market. It can increase and decrease, depending on how the market functions.
Do your calculations and homework, and go for the deal that gives you what you need.
The Easy Application Process
To save time, apply from the same bank that gave you your home loan. Though there is no requirement for a prior relationship between a lending institution and a borrower, it helps to speed up the process as your verification documents are already with the bank.
Most banks offer online loans. So even if you are a new borrower, you won’t actually have to visit a branch. You can submit all your paperwork, including verification documents and renovation plans, online. All you need is a computer with an internet connection.
The Percentage of Coverage
Most banks offer to cover up to 80% of the renovation costs of a new borrower. The remaining 20%, however, needs to be paid by you.
However, some banks—not all—are willing to cover 100% of the costs for existing customers. This essentially means that you won’t have to spend a paisa from your own savings!
It’s usually a good idea to compare the coverage percentages of different banks, so that you can pick the one that gives you the most financial benefits.
Quick Disbursal of Funds
More often than not, requirements come in the form of urgent needs to repair your house. The roof may have just started leaking, or the electrical circuits may suddenly malfunction. In such scenarios, a quick access to funds is crucial.
A Home Improvement Loan gets you quick capital in times of urgent need. For salaried individuals, most banks disburse the loan within 4-5 days from the day of submission of all required documents.
No Prepayment Charges
The Reserve Bank of India (RBI) has announced that banks are no longer allowed to impose a prepayment penalty on those who pay back the entire loan before the end of their tenure. So, if you get a big bonus at work, you can now use that capital to repay your loan.
Your bank cannot charge you any penalties for returning the loan amount before the deadline.
Bonus – Tax Benefits!
Did you know that Home Improvement Loans are actually eligible for tax deduction? When you take such a loan as a homeowner or co-homeowner, the interest is tax deductible as per Section 24(b) of the Income Tax Act to the maximum amount of Rs.30,000 per annum. This exemption falls under the same category as the overall tax benefit available for Home Loans.
Hence, the combined limit of tax deduction for both Home Loan and Home Improvement Loan is Rs.2 lakh.
As you can see, there are many benefits to taking a Home Improvement Loan. It can save you from a huge financial burden, while giving your home the makeover it needs. Browse around the internet and compare what different banks have to offer. Find the loan that best meets your requirements, apply online, and get going with your renovations!