What Is Home Renovation Loan?

Renovating a home comes with many reasons and purposes, some of which are necessary while others are for the purpose of uplifting the appearance and also the value of a home. Getting a home renovation loan is the same as getting a home loan, only that the renovation loan does not include a plot and an existing house is already constructed on a property and renovation is what you need the loan for.

Key Benefits & Features

Getting a home renovation loan is necessary especially if you do not have enough funds to sustain the cost of this project.

Some of the benefits and features of this loan are noted below:

• The tenure of this type of loan varies based on the financial institution, like agrimhfc provides home loans, and contacting them to inquire about the tenure of the loan is a good idea. Most of the time, the tenure ranges from five years up to thirty years – although government schemes for this type of project may be different.
• This loan can be acquired for any renovation work in the house, may it be the installation of kitchen fittings and bathroom or even for a home extension.
• About ninety percent of the total cost of the proposed project can be availed using the loan.
• Customers can choose between floating and fixed interest rates.
• This loan offers a hassle-free and simple documentation process.
• This type of loan is available for both self-employed professionals and salaried customers, above the age of 21.
• This type of loan offers a simple repayment process through a monthly installment system.

Loan-to-value Ratio

The loan value ratio or LTV is the connection between the value of the house and the amount left on the mortgage if in case the house is still under the mortgage. For instance, if the LTV ratio of the house is 70%, the borrower owns 30% of the house, financially speaking.

Tax Benefits

One of the benefits of a home renovation loan is tax. This type of loan gives the borrower a tax benefit on the loan’s interest component. You can get as much as Rs 30,000 per year for the interest you need to pay on a home renovation loan.

Balance Transfer Facility

Transferring the balance of your loan to another facility is a good idea, provided that the facilities of this type of home loan are offering lower interest rates. Refinancing the loan to a different facility is most of the time considered by homeowners who want to pay lower interest, and also get money out from their property.

Loan Tenure

The tenure of such loans can be between 1 to 30 years. The tenure is dependent on factors such as the borrower’s age, and also the institution where the loan is being acquired. The younger the borrower, the longer the tenure of the loan can be approved.

How do Home Renovation Loans Work?

The value of the home renovation loan will highly depend on the value of the house after the renovation is completed. The bigger the project, the bigger you can loan.

Home Renovation Loan Government Schemes

The processing fees for home renovation loans range from .25% up to 2% of the total amount the borrower will loan. Reserve Bank Of India laid down strict and straight guidelines to prevent lenders from overcharging.