Finally, the day has come when you will after some months live in a newly done up home. You have decided to redecorate your humble abode using a home loan.
A home loan is of various types:
1. Home Loan for buying a house.
3. Home Extension Loan to add extra space to your home.
4. Plot Loan to buy a land plot.
5. Short-Term Bridge Loan for buying a new home till your existing home is sold.
6. Reach Loan for customers in the unorganized sector.
7. Rural Housing Finance offers funds to farmers, agriculturists, etc.
Below are the main features of home improvement loans:
1. Flexible usage of funds
The home loan for improvement of your house does not restrict you for using it for particular refurbishing purposes only. You can use it for renovating, repairing, flooring, extension, painting, etc. You can only use the funds to improve or change the structure of your house and not to repair or redecorate movable objects such as furniture.
2. Who is eligible?
Any self-employed or salaried individual is eligible for this loan. You should be an Indian resident of above 21 years of age. Also, your age shouldn’t reach beyond 65 years when the loan tenure matures.
In order to not be burdened under the debt of the loan, it is good to calculate your eligibility for the loan amount you take. You can do this by using a home loan eligibility calculator. It will help you find out whether you can afford the loan amount you want to take and, if not, apply for an amount which is perfect for your financial capability.
3. What are the documents required?
Documentation process of home improvement loan is quite simple and hassle-free. You are required to submit the following documents:
1. Loan application form.
2. Proof of identity, income, employment, and residence.
3. Bank statement of last 6 months.
4. Photos.
5. Cheque declaring payment of processing fees.
6. Your home’s original title deed.
7. No-encumbrance certificate.
8. Estimate of architect or engineer regarding your house’s improvement work.
There are many advantages to a home improvement loan, which are highlighted below:
1. Competitive interest rates
When you take a home loan for refurbishing your old house, you will enjoy fantastic interest rates. A home improvement loan is available in the same rates as a home loan and thus, is a much better option than a personal loan which charges high-interest rate.
2. Tax benefit
You can avail a tax benefit of Rs. 30,000 per annum on the interest you pay on your home loan. This deduction is on the overall limit of Rs. 2 lakh that is available on loan interest payment of self-occupied homes. Thus, this deduction of 30,000 could save you up to Rs. 10,300. This means the overall cost of borrowing will be very less.
3. Fast processing
As mentioned earlier, the documentation process of the home improvement loan is hassle free and smooth. Not just that, the lenders also fasten the process of approving your application and disbursing the loan amount to you. This fast processing means you can immediately start on the renovation of your home without waiting for long.
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