Still Thinking to Renovate Your House?
As per a report, housing credit jumped by 9.9% during the period April – November 2019. Furthermore, in the period from November ‘18 – November ’19 growth in the home loan segment was clocked at 18.3%.
- The total outstanding balance in the home loan sector stood at Rs.19 lakh crore, as of December 2019.
- The number of accounts in the home loan segment stood at 14.2 million for the same timeline.
Even though a home loan is an excellent monetary device to finance the purchase or construction of a residential property, requirements associated with a home venture beyond that. A home requires up keeps and occasional renovations as well as modifications to its existing design if and when necessary.
In such cases, more often than not, you might prefer to utilize your savings to finance those ventures. However, in specific cases, it may be sounder financially to utilize a home renovation loan. That way, not only will it allow you to maintain your financial standing even when addressing a major expense but also provide adequate funds at your disposal.
What is a loan for a home renovation?
Financial institutions in India offer home renovation loans in the guise of either a top-up loan or a personal advance. Both these credit facilities are void of any end-use restrictions. Since a home renovation might entail a variety of expenses ranging from purchasing home decor items to roof repairs, that feature makes those two options ideal devices to finance a renovation venture.
However, before you engage in the debate of top-up loan vs personal loan and which you should choose for furnishing your home, consider a few pointers –
- Loan amount
Typically, financial institutions provide a personal loan up to Rs.25 lakh. On the other hand, the lenders provide up to Rs.50 lakh as a top-up loan. While the former might suffice in some cases, the amount might fall short in more ambitious home renovation ventures.
- Interest rates
You might also want to ensure a restricted interest outgo. In the case of a personal advance, the interest rates are considerably higher than a top-up loan. Therefore, the latter might be a more viable and beneficial option of the two as a home renovation loan.
What are the features of a home renovation loan?
Here’s all about home improvement loans that you need to know –
- Long repayment tenor
One of the primary advantages of a top-up home renovation advance is that it offers an extended repayment tenor compared to other credit facilities sans end-use restriction. It can extend for as much as 15 to 20 years.
Therefore, even if the amount you borrow is substantial, you can choose to repay the loan conveniently by opting for a suitable loan tenor. You might use an EMI calculator to compute the installments and choose a tenor that suits your affordability.
- Minimal documentation
A top-up home renovation loan is essentially a credit that you can avail of over and above your existing home loan. Typically, financial institutions offer a home top-up loan with them. Since the heft of documentation takes place during balance transfer, financial institutions require minimal to zero documentation to advance a top-up loan.
The home loan segment is expected to grow at a CAGR of 9% – 12% in the Financial Year 2020 – 21.
- Online accessibility
Another critical feature of a loan for the home renovation is that you can access your loan account online. That way, you can manage payments towards home decor item vendors and other entities
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