Home renovations are essential since keeping a property upgraded improves its functionality and value and elevates the overall convenience of the residents. However, improving a home involves a substantial investment. Utilising savings to undertake the entire task can strain your finances and leave you exposed to unprecedented costs in the future.
It may be wiser to fund a project of this sort with a home improvement loan. It comes with several benefits to make the whole process simpler and more flexible. But, before you submit your loan application, there are a few important points you must keep in mind.
What should you know about home improvement loans?
When applying for a personal loan for this purpose, you will need to have full information on the eligibility criteria, documents, repayment process, and tax benefits that come with it.
Here is a list of factors that you should consider for a home renovation loan –
The eligibility criteria for a personal loan depends on the financial institution. Before you submit the application, ensure you meet their eligibility criteria. However, a few standard parameters are common across most financial institutions in India. These include –
- The applicant should be between 25 and 58 years of age.
- He/she needs to be an Indian resident.
- If a salaried individual, they must be employed in a registered public or private limited company or an MNC. Stable employment assures your ability to repay.
- Based on the area of residence within the country, the minimum income requirement might vary.
- An applicant should also possess a CIBIL score of 750 or above to be eligible for a personal loan.
Meeting these criteria is necessary to be eligible for a personal loan from various reputed lenders. However, it’s an indicative list of criteria, and financial institutions might require you to fulfil additional parameters before sanctioning a personal loan for home improvement.
The process of applying for a personal home improvement loan includes submitting a handful of documents for a seamless approval process. Keep handy the following documents while applying for a personal loan –
- Identity, employment or business, residence and income proof.
- Financial statement of the last six months
- Duly filled application form
- A cheque for the processing fee
- The original title deed of your home
- An estimate by decorator or architect for the renovation
- No-encumbrance certificate
Organise your documents as per the list to ensure a speedy loan approval after applying. Note that a lender may or may not ask for all the documents listed above or might require additional papers. Inquire about this beforehand to streamline the documentation process.
A personal loan for home improvement is also eligible for a tax deduction under Section 24(b) of the Income Tax Act. An individual can enjoy a tax deduction of up to Rs.30000 on the interest they pay towards a home renovation loan. Both homeowner and co-owner are eligible for this tax benefit.
What’s more, an unsecured home improvement loan involves zero end-use restriction, meaning you can utilise the fund in any which way you prefer. Thus, it offers more flexibility and helps managing finances simpler.
You can obtain up to Rs.25 lakh as a personal loan for home renovation from leading financial institutions like Bajaj Finserv. However, ensure you meet all the eligibility criteria to be eligible for the highest loan amount. Also, check the home improvement loan interest rate calculator to make an informed choice.
Individuals can also simplify their loan application process by availing pre-approved offers. These offers are available on a personal loan, credit card, business loan, etc. Check your pre-approved offers by providing your name and contact details.
Obtaining a home improvement loan is a convenient measure to minimise the financial stress that may arise due to such an undertaking. Moreover, flexible repayment options allow borrowers to settle their loans conveniently.