You can approach bank or financial institution for the purpose of obtaining home renovation or home improvement loans. It is essential to understand what the inclusions and exclusions of this home renovation are. The applicant must know his or her eligibility for applying such a loan.
It is difficult for a middle-class person to buy or renovate his house with savings. House improvement also requires a lot of money for painting, appliances, fittings, electric cables, and so on. If you want to make your house more beautiful and comfortable than others, then you will have to spend more for it. For instance, French windows and POP ceilings can add a nice look to your home.
Home renovation loans help in improving the existing house or a purchased one.
Are you eligible?
Obviously, you must a home owner and not a tenant. The approval of home loan amount depends upon the estimated cost of renovation. If you have already availed home loan, then the bank will evaluate the overall loan amount, the existing home loan and loan required for renovation. The total amount must not be more than 85% of the property value.
Are you ready?
Let us understand the process of applying home improvement loan. We will consider two situations. In Situation One, you have already availed home loan. The process will sound simple to you. You need to apply for home renovation loan along with a rough estimate of the renovation work or extensions to be made. Bank may also ask for approved plan for the same. Bank will conduct physical verification of your place and analyze the estimates. If it is found suitable, then a loan will be further granted.
If you do not have any home loan, then you are required to make a fresh application for the same. You must submit all the property documents and income statements for getting approval of loan. Please note that you are required to pay a nominal processing fee for loan application in both the cases.
Are you aware?
This question is pertaining to what is included and excluded from your home renovation loan. The physical verification of the property may not be carried out in case you are a home loan customer of the same bank. But for fresh applications, this verification is important.
Home renovation loan is granted for purposes such as flooring, painting, elevation, room extension or including a new balcony. An approval is also needed for permitting this kind of work from the co-operative society in which you reside.
But if you need loan for purchasing new furniture like wardrobe or consumer goods such as refrigerator, then banks will not grant loan for this purpose. You may have to take a personal loan or a consumer loan for that purpose. Furniture and consumer durable goods are not included in the home renovation.
The tax effect
You must be aware that interest paid on home renovation loan is subject to tax deductible till Rs. 30, 000 in a year. You must update with the recent changes in it.
Thus, if you are planning to renovate house, then you may surely apply for home renovation loan instead of using savings.
