A roof over your head undergoes depreciation and may require renovation or repairs from time to time. The home you live in is bound to undergo wear and tear over a period of time and requires frequent maintenance. You may need to redo the tiling, replace some fixtures or may have to overhaul certain areas in your home because they have been rendered unlivable.
As is quite evident, home renovation expenses is not a matter of small change you can accumulate from here and there and often times requires careful planning and putting aside of funds. But what if despite your best efforts you are not able to put together the funds required to carry out your home makeover? Do not fret, for help is at hand!
Just like you can knock on the doors of lenders to check out the best home loans in India to purchase property, you can take a home improvement loan to carry out the renovation or repairs as required in your home. You may avail of a such a loan to carry out external or internal repairs, roofing, painting or waterproofing your home or even adding an extra room. Such loans are available for a tenure of 10-15 years and are available at an interest rate that may range from 9-10% akin to home loan interest rates.
The final amount disbursed to you will depend upon your repayment capability as assessed by the bank, the value of the property in which you wish to carry out the renovation and the estimate you are expected to furnish by a certified architect or a home improvement firm. Needless to say, if you have been making a conscious attempt to improve your CIBIL score and have a CIBIL score of 750 and above, it works out all the better for you.
Advantages of an existing borrower
If you are an existing home loan borrower, of the lender you have chosen to take a home loan improvement loan from and have a great service track record as well increased your CIBIL score to 750, you may negotiate with your bank to waive off the processing fee that may range between 0.5-0.75% of the total loan amount. A new customer will however be required to pay up this processing fee.
There are further benefits if you are taking a home improvement loan from an existing lender. Firstly, you would have gone through an extensive documentation procedure during the processing of your home loan, therefore for a home improvement loan your documentation will be minimal. Further you are likely to get up to 100 per cent of total cost as opposed to new customers who may get up to maximum of 90% of the total cost of renovation.
Inclusions and exclusions
While a bank may be willing to give you a home improvement loan easily, if you have a good CIBIL score, just like the way you become eligible for the best home loan interest rates with a good score, but the expenses you quote ought to be reasonable. When you submit an estimate for the renovation, a valuation expert from the bank will arrive at your place to assess the extent of repairs and renovation required.
Only after he gives a certification of verification will the bank go ahead with the processing of your home loan. Most banks do not extend home improvement loans for moveable furniture and furnishings, but some others do make an exception. You must understand the inclusions and exclusions as well as the rate of interest while availing of such a loan.
Where home improvement loans score
If you are a new customer willing to take on a new loan for the purpose of home improvement, you may be tempted to consider a personal loan instead. More often than not new customers tend to find unsecured personal loans easier just because the documentation is considerably lesser. A new home improvement loan on the other hand will need you to furnish your property documents, an estimate from the architect and in some cases even a no objection certificate from the housing society if the house is being remodeled to a large extant. This is in addition to the financial statement and the KYC that a new customer must furnish. But do bear in mind, that small personal loans are not just costlier, they are unsecured loans as against home improvement loans that are secured.
Therefore, if you opt for such a loan as against a personal loan, you will also get a chance to improve your CIBIL score as the scales definitely tilt towards secured loans when it comes to the computation of your credit history. Lastly but not the least, borrowers may also reap a tax benefit on such loans up to the tune of Rs 30,000. However, this is on the interest component of the loan and not the principal amount repaid.
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