Banks and NBFCs offer an array of housing
loans right from home purchase loans to construction loans to land purchase
loans to loan against property. One other popular type of house loan is the
home renovation or home improvement loan. Let us understand the features and
benefits as to why it is accessible.
What is it?
Also called as a home renovation
loan, in which you take to renovate, repair, remodel, or improve your
house. You can apply for the loan for making different types of changes to your
home or give it a makeover. For example, if you seek to make structural changes
to your home, apply for this loan. You can also apply for the loan for small or
big repairs, i.e. repainting the house, fixing leaky ceilings, hanging
electrical wires, and furnishing the home. Such loans apply to all kinds of
changes for making the square-feet area of the property yours.
Features and benefits:
Collateral
Like in the case of house loans, you home serve
as a security when you take out this loan. The lender allows you to borrow funds
by pledging the property as security, based on the loan amount. Generally, you
do not need to offer collateral if the loan amount is lesser than INR 5 lakh. If
it exceeds the mentioned amount, the lender retains the property documents and
returns only once they get paid off.
Estimate of expenses
Lenders ask for the estimate of renovation
costs. You need a civil engineer or architect firm to assess the property and
provide an estimate of the total amount you require for renovation or
remodelling of the house. This document is essential and must submit it along
with necessary papers while applying for the loan.
Minimal documentation
The paperwork under house renovation loan
is less as opposed to other kinds of home loans. You
must furnish ID, address, employment, and income proof along with property
documents. Remember, if you are joint owners, make sure all the documents of
the joint owner get submitted for the loan to get sanctioned.
Interest rates
These loans can be availed for lower interest
rates. The EMI payable against them is the lowest among all kinds of loan
available in the market. Since you can apply for the loan only because you are
the owner of the asset, lenders believe you can repay them. However, both
interest rates and payable EMIs depend on the loan tenure chosen.