Home Improvement

Best Home Improvement loans in India

When you build a house, you aim to keep it in a good position afterwards. This could be the possibility at the end of the festival season even more. So you’re planning to redo your house, and wondering how to exactly fund your expenses, then different loans are available in the financial market. House renovation is an extensive process and includes tasks like painting, remodeling, newer interiors, internal repairs etc. Even a bigger construction work such as adding rooms, or floors can add upto a gigantic home improvement loan.

Home improvement loan is essentially meant to renovate a house, and is provided to the owner of the property. Maximum tenure is typically 15 years and interest rates at present are in 9.5-10.5% per year range, depending on lender, loan amount and eligibility.

According to a report, lending institutions provide loans close to 80% of the home improvement or extension work to be done.

Let’s have a look at the best home improvement loans in India:

  1. HDFC Bank:

For new customers:

Higher the loan amount, lower would be the funds provided. For a few banks, if you request between 20 lacs to 75 lacs, 90% of the loan is sanctioned, however, if the loan amount is higher than 75 lacs, only 75% will be sanctioned.

For an existing customer:

If repairs are required on a mortgaged property, then the coverage would be upto 100%, dependent on the market value of the property (not more than 80% in this case).

Subject to conditions as given under:

  • The processing fee on loans will fall between 0.5%- 1% of the loan amount.
  • The tax exemption can be realized under section 24(b) of the income-tax Act.
  • The interest paid on home improvement loan is deductible up to 30,000 annually. The owner, together with the co-owner are eligible for tax deduction on the interest. The exemption is inclusive within the home loan interest bracket at 2 lacs.

2. Kotak Mahindra Bank

If as a borrower you visit the existing bank, then the process is much faster. This is possible because all the relevant papers are already with the lender.  The only difference will be that now the property will stand as collateral.

In addition to regular income and property papers, an Architect’s Certificate is required along with full details of the work to be carried out.

 Ofcourse, its much faster if you’re salaried. It takes between 4-5 days from the day of submission of all requisite documents. For businessmen, it’s between 7-9 days.

If you’re not fully sure about home improvement loans, then you could also consider the options given below:

Top-up loan: A top loan can be taken to top up the ongoing loans. However, these are available after a defined number of years of home loan. Most banks have determined between the bracket 15-20 years with lower interest rates. Though, they are not as low as home loans.

 Personal loan: Personal loans are considered the expensive ones.  The interest rates fall between their interest rates range between 10% and 25% per annum. Prepayment charges are also high between 2-5% of the principal amount. The tenure offered ranges between 5-20 years usually.

Gold loan: Let’s assume you do not qualify for a home improvement or personal loan, then you could contemplate on gold loans. This is a safe alternative to either personal or home improvement loans. A gold loan has high interest rates between 10-18% per annum however they are easier to find. And the tenure is typically 12-15 months.

 

If we start to draw comparisons, then a home improvement turns out to be cheapest form of credit.

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