Personal Loan: Do you want to renovate your house? You may want to opt for THIS loan to save money

It is understandable that the acquisition of a Personal loan It is the last resort for many people. Whenever a salaried employee encounters financial problems, the first option that comes to mind is to apply for a personal loan.

TO Personal loan It is an unsecured loan that can be processed without problems by applying for it with a bank or a NBFC and helps the borrower overcome a financial obstacle with ease.

Personal loans can address a wide range of financial needs. borrowers For example, buying an expensive item, going on vacation, or dealing with a medical emergency, there are various financial needs that can be met by taking out a customized loan rather than a personal loan, which is more generic.

Here we refer to the Home Improvements Loan. As your family expands, you may need to add a floor or bathroom to your existing home. A specific home improvement loan from a financial institution can help you meet this requirement. Several financial institutions offer home improvement loans, such as Bank of Baroda, Kotak Mahindra Bank, Aditya Birla’s Capital, Aadhar Housing Finance and GNP Housinginter alia.

Let us understand the nuances of home improvement loans in detail here.

Reasons to opt for a home improvement loan instead of a personal loan:

TO. Lowest interest rate:While it is not a general rule, there are certain financial institutions that offer home improvement loans at a rate lower interest rates compared to personal loans.

B. Temptation to spend on other purposes:When you apply for a personal loan, you can use it for anything. There may also be a chance of overspending, as there is no accountability for where the money actually goes. However, when you apply for a home improvement loan, you will of course be spending it on a capital investment.

DO. Clash with other personal loans:You may already have a personal loan that you have applied for for another purpose or you may be thinking of applying for one in the near future. In that case, it makes sense to apply for a home improvement loan as it does not conflict with your other loan requirements.

D. Tax benefits: Unlike Personal loanThe home improvement loan allows taxpayers to claim tax benefits against the interest paid on the loan.

Home Improvement Loan Interest RateWhile some financial institutions charge 13 to 15 percent interest on their personal loans, one can get a home renovation loan at a much cheaper rate.

For example, ICICI Home Finance mentions on its website that borrowers (who have been repaying a loan for the last 2-3 years) can switch to them provided their interest rate is above 11 percent per annum.

Documents required for home improvement loan:

1.Shape:The applicant must submit a fully completed application form.

2. Proof of identity:Proof of Identity and Residence (KYC) such as Aadhaar, PAN card, Voter ID card, Job card issued under NREGA, etc.

3. Proof of income:Pay stub for the last two months, Form 16 and bank statement for the last 3 months

4. Property documentsThe bank may also ask you to show documents for the property you wish to renew.

Eligibility to apply for a home improvement loan:

TO. Nationality:Applicant must be a resident of India to apply for home improvement loan.

B. Age limit:The loan is generally provided to applicants who fall in the age group of 23 to 60 years (for residents) and 25 to 60 years (for NRIs).

DO. Co-owned property: Some financial institutions like ICICI Home Finance offer better interest rates to women to encourage them to apply as co-applicants. Therefore, it is recommended to add the wife or mother to the application even if they are not earning money.

Frequently Asked Questions (FAQ):

What is a home improvement loan?

It is a category of Mortgage loan to renovate a house and finance repairs. The money can be used for home renovations, including painting and whitewashing, tiling and flooring, waterproofing, plumbing and sanitary work, among other things.

Who is eligible for a home improvement loan?

Home improvement loans can be availed by any person, whether salaried or self-employed, who has a regular source of income.

Can you buy furniture with money from a home improvement loan?

Home improvement loans generally cannot be used to purchase movable items such as furniture.

Are there tax benefits to applying for a home improvement loan?

Yes, there is Tax benefits up to ₹30,000 against interest paid on home improvement loans.

V. What is the maximum term of a home improvement loan?

The maximum term for a home renovation loan is 20 years, but the project must be completed within one year.