Your home is not merely a roof over your head but a manifestation of your identity and a source of pride. Living in a visually pleasing home is a delight for all. If you’re considering renovating or updating your residence, you don’t have to wait until you’ve saved enough funds. By applying for a home renovation loan, you can give your dwelling a complete overhaul.
These are unsecured types of loans, and they allow you to improve a home you already possess. There are two types of home renovation loans: secured (where your home is used as collateral, and you receive a more significant loan amount at a fixed interest rate) and unsecured (where no collateral is required, but you pay a higher interest rate and cannot claim tax benefits). Below are several benefits of availing of a home renovation loan.
Benefits of a home renovation loan to finance your house renovation
- Cost-effective
Contrary to popular belief, home renovation loans are an economical option, with lower interest rates than low-credit personal loans or other types of financing.
- Tax benefits
Like home loans, home renovation loans also offer tax deductions on the interest paid on the borrowed amount. However, it is crucial to be aware of the limitations of these benefits before opting for the loan.
- Flexibility
The funds acquired through a home renovation loan may be utilized for various improvements, such as repairing, extending, flooring, painting, and more. The loan amount can be used for any project related to the structure of your existing home, making it a versatile financing option.
- Eligibility
Regarding eligibility for the home renovation loan, you can apply as an individual or jointly with another applicant. If the property is co-owned, all the owners must apply together for the loan.
Critical features of a home renovation loan to finance your house renovation
Simplified and fast application process: Applying for a home improvement loan is a hassle-free and straightforward process that requires minimal documentation. You can avail of a loan against your property for home improvement or renovation, with interest rates lower than those of low credit personal loans.
You only need to submit a few documents, such as proof of income and residence, photo identity, property-related papers, and an estimated renovation cost. The process is quick, and loan disbursement happens within 24 hours of application approval.
Attractive interest rates: Home renovation loans come with attractive rates, but it is essential to research and compares different offers before finalizing a lender. It is also necessary to understand the various terms and conditions, tenures, prepayment/foreclosure charges, and interest rate types (floating or fixed) before deciding.
Flexible repayment options: These loans provide flexible repayment plans that can be customized to your financial needs and objectives. This ensures you do not face liquidity crises while making timely payments through EMIs.
Tax benefits of home renovation loan
A home improvement loan allows you to renovate your home to match your taste and style, unlike a home loan that assists you in purchasing a house. The purpose of a home improvement loan is to enhance your existing home. The documentation process for these loans is straightforward, and you only need to provide essential documents like proof of identity, proof of income, passport-size photographs, and property title deeds. This ensures a quick approval process, allowing you to begin your renovation work without delays.
The best part about home improvement loans is that you can avail of a tax benefit on the interest component of the loan. You can claim a deduction of up to Rs 30,000 per annum for the interest paid on these loans. When combined with the interest paid on other home improvement loans, you can claim a deduction of up to Rs 2 lakh. This deduction can result in a tax saving of up to Rs 10,300, reducing your overall borrowing cost.
Conclusion
Improving your home can significantly increase its value and make a living more comfortable. A home improvement loan can help you eliminate financial limitations and renovate your home as you have always wanted.
Additionally, tax benefits are available on secured loans, making it an even more attractive option. A home renovation loan is the best way to finance home improvements.