Home Loan for Renovation
A home renovation loan is one of the most beneficial home loan tools one can ask for. This guide will give you a general understanding of the Home Renovation Loans. This includes their features and benefits, eligibility criteria, required documents, fees or charges, and more. For a better understanding, some of the government schemes for home renovation loans and offers from the different banks are also included. You will also find some key tax benefits along the way.
Home Loan for Renovation - An Overview
Your home is more than just a place to hang your hat; it's your sanctuary, your canvas for creativity, and a reflection of your unique style. But what happens when you want to give it a fresh look or fix those leaky faucets, and your savings fall short? This is where the magic of home renovation loans comes into play. Home renovation loans are financial tools designed to help you turn your dream home into a reality. Whether it's a modern kitchen makeover, a cosy bedroom retreat, or essential repairs to keep your dwelling safe and comfortable, these loans can be the key to transforming your living space.
In this comprehensive guide, we'll take a closer look at home renovation loans, how they work, and the benefits that can be avail by homeowners like you. You can also address these loans as ‘Home Improvement Loans’ or ‘House Remodel Loans’. From understanding the different government schemes for renovation loans to tax benefits that will be best for your needs, this guide has got you covered on your journey to a better, more beautiful home. So, let’s take a step forward and explore the realm of home loans for renovation together.
Eligibility Criteria for Home Renovation Loan
Here are the general eligibility criteria that one should meet before applying for a House Renovation Loan:
- Age: The age of a salaried individual must be between 23 to 75 years. A self-employed individual can apply for a home loan for renovation if the individual’s age ranges from 25 to 70 years.
- Employment: Salaried employees should have a minimum of 3 years of employment experience. Applying for this home loan requires a minimum of 5 years of business vintage.
- Credit Score: A healthy credit score is necessary to apply for a Home Renovation Loan. Generally, banks and NBFCs prefer candidates who have a credit score of 750 and above.
- Income: Banks and NBFCs regularly check and verify the income of the individuals applying for a home loan of ₹60 Lakh. Income should be sufficient for EMIs that need to be paid by the borrower.
- Loan Tenure: Any individual who is applying for a home loan within available loan tenure is acceptable by the banks and NBFCs.
- Documents: Every applicant must possess all the necessary documents required to apply for a Home Renovation Loan.
Benefits and Features
A home renovation loan typically offers several features and benefits. Some are mentioned below:
- Amount of Loan: A wide range of expenses can be covered with a home loan for renovation. These expenses range from minor repairs to major remodelling projects. The loan amount depends on your financial needs from the loan and the policies of the lender organisation or the bank.
- Flexible Terms: You are allowed to choose from various repayment terms, allowing you to adjust the loan amount with your budget.
- Rates of Interest: Depending on the type of loan (e.g., personal loan, home equity loan), you can find interest rates that are competitive and lower than credit cards or unsecured loans. This completely depends on the type of loan and the bank’s policies.
- Secured and Unsecured loans: You can apply for secured loans using your home as collateral. Also, depending on your financial situation and risk tolerance, you can apply for unsecured loans (no collateral required).
- Tax Benefits: Some home renovation loans, like home equity loans or lines of credit, may offer tax benefits on the interest that will be paid. This will potentially reduce your overall cost.
- Home Estimation Improvement: Redesigns can give development to your home's reasonable worth, possibly permitting you to utilise the venture while selling.
- Solace and Decency: Home remodels can make your residing space more agreeable, practical, and charming.
- Energy Productivity: Energy-proficient changes can be integrated into redesigns, reducing utility expenses and less natural impacts.
- Personalisation: Your home can be changed to all the more likely accommodate your inclinations and lifestyle.
- Staying away from Conceded Support: Making dire fixes can keep away from greater, more costly issues later on.
- Comfort: Supporting your remodels with devoted credit can improve the planning system and guarantee you have the assets expected to finish the task.
It's crucial to research different loan options, compare interest rates, terms, and eligibility requirements from various lenders, and carefully consider your financial situation before selecting a home renovation loan. You can also consult with a financial advisor or lender to determine the best option for your specific needs and circumstances.
Documents Required For House Renovation Loan
All the required documents for the Home Renovation Loan are mentioned below:
- Identity Proof: Applicants are required to provide one of the documents for proof of identity. These documents include a Driver's License, Voter ID, Passport, and Aadhar Card.
- Income: These documents are required to verify the income of the applicant. These documents include the latest salary slip from the existing employer, ITR of last year, bank statement, P/L statement or balance sheet.
- Address: Documents required to verify the applicant's address are address-proof documents. These documents are utility bills, passports, rental agreements, etc.
- Age: Documents required to verify the applicant's age are age-proof documents. Documents required for the age proof are a birth certificate, Aadhar Card, and Voter ID.
Fees and Charges
Below are the general fees and charges that are applicable for a Home Renovation Loan:
|Fees and Charges
|Up to 2% of the loan amount
|Vary from lender to lender
|Home improvement loan interest rates
|Starts from 6.85% .p.a
|Switching charges from fixed to floating interest rates
|Starts from 0.25% of outstanding balance
|Depends on the bank’s policies
|Depends on the bank’s policies
Home Renovation Loan Government Schemes
The government introduced some home remodel loan schemes that helped different classes of people improve their houses. These home renovation government schemes are mentioned below:
Pradhan Mantri Awas Yojna
Pradhan Mantri Awas Yojna, or PMAY-Urban, is a government scheme introduced in 2015. This scheme offers interest rate subsidies to the residents of India. Features of this scheme also include economic growth, quality life improvement, affordable loan prices, implementation area, etc.
Dr. B.R. Ambedkar Awas Navinikarn Yojna
This scheme is available for residents of Haryana only. Individuals who fall below the poverty line can avail of this scheme for home improvement. This scheme requires the applicant to own a house for at least 10 years.
The Housing and Urban Development Corporation (HUDCO) offers home improvement loans at affordable interest rates for house improvement or renovation purposes. HUDCO Niwas offers loan amounts up to Rs. 1 Crore and a maximum of 25 years as a loan term.
Maharashtra Housing and Area Development Authority Scheme (MHADA)
MHADA runs a house renovation plan to work with reasonable living for everybody. The plan is worked through a lottery framework. A specific number of houses are saved for the MHADA renovation plan. House improvement loans are available for applicants who have a house with various repayment plans depending on lottery draw results. These houses cost between ₹15.35 Lakhs and ₹1.42 crore.
Tax Benefits of Home Loan for Renovation
A Home Loan for Renovation benefits the applicant in tax savings as well. Below are the tax benefits that you can avail of with a Home Improvement Loan:
- Interest Derivation: Under Segment 24(b) of the Income Tax Act, you could guarantee a derivation on the interest paid on the loan taken for home remodel. The greatest derivation permitted depends on ₹2 lakh each year for a self-involved property.
- Head Repayment: The principal sum repayment on the home renovation loan can be qualified for a derivation under Segment 80C of the Income Tax Act, dependent upon the highest limit of ₹1.5 lakh each year, alongside other qualified speculations.
- Joint Loans: If you brought a joint home loan for renovation with a relative, both co-borrowers could get derivations independently inside their separate limits.
- Finish Testament: To guarantee these derivations, getting a completion declaration for the renovation work from the related specialists is essential.
Home Renovation Loan Offers
Below are some of the home renovation loan offers from various reputed banks and NBFCs:
SBI Home Renovation Loan
Below is some information about the SBI home renovation loan:
- Benefits: State Bank of India offers home loans for renovation with low interest rates, zero hidden charges, zero pre-payment charges and more.
- Eligibility: Any Indian citizen can apply for an SBI home renovation loan. Applicant should have a minimum age of 18 years and a maximum age of 70 years by the time of loan maturity. You can get a loan term of up to 30 years.
- Fees and Charges: The general processing fee for an SBI home renovation loan starts at 0.35% of the loan amount or a minimum of ₹2000 and a maximum of ₹10,000. Interest rates of SBI home loans for renovation start from 9.15%.
HDFC Home Renovation Loan
Below is some information about HDFC Bank home renovation loan:
- Benefits: HDFC Bank offers home loans for renovation with minimal paperwork, flexible EMIs, competitive interest rates and more.
- Eligibility: Any Indian citizen can apply for an HDFC Bank home renovation loan. Applicant should have a minimum age of 21 years and a maximum age of 60 years by the time of loan maturity. You can get a loan term of up to 30 years.
- Fees and Charges: The general processing fee for an HDFC Bank home renovation loan starts at ₹4,999 + GST. Interest rates of HDFC Bank home loans for renovation range from 10.50% to 25% of the loan amount.
ICICI Home Renovation Loan
Below is some information about ICICI Bank home renovation loan:
- Benefits: ICICI Bank offers home loans for renovation with quick approval, available for all homeowners, tax benefits and more.
- Eligibility: Any Indian citizen can apply for an ICICI Bank home renovation loan. Applicant should have a minimum age of 23 and a maximum age of 60 by the time of loan maturity. You can get a loan term of up to 20 years.
- Fees and Charges: The general processing fee for an ICICI Bank home renovation loan starts at 0.75% of the loan amount or a minimum of ₹11,000 and KYC charges of ₹2,000. Interest rates of ICICI Bank home loans for renovation start from 11.25%.
Axis Bank Home Renovation Loan
Below is some information about Axis Bank home renovation loan:
- Benefits: Axis Bank offers home loans for renovation with low interest rates, zero hidden charges, low pre-payment charges and more.
- Eligibility: Any Indian citizen can apply for an Axis Bank home renovation loan. Applicant should have a minimum age of 21 years and a maximum age of 60 by the time of loan maturity. You can get a loan amount of up to ₹40 Lakhs.
- Fees and Charges: The general processing fee for an Axis Bank home renovation loan starts at 0.45% of the loan amount. Interest rates of Axis Bank home loan for renovation start from 9.15% of the loan amount.
Bank of Baroda Home Renovation Loan
Below is some information about the BOB home renovation loan:
- Benefits: BOB offers home loans for renovation with impressive interest rates, insurance cover, simple processing and more.
- Eligibility: Any Indian citizen can apply for a BOB home renovation loan. Applicant should have a minimum age of 21 years. You can get a loan amount of up to ₹10 Crore.
- Fees and Charges: The general processing fee for a BOB home renovation loan starts at 0.35% of the loan amount. Interest rates of BOB home renovation loans start from 6.50% of the loan amount.
LIC HFL Home Renovation Loan
Below is some information about LIC HFL home renovation loan:
- Benefits: LIC HFL offers home loans for renovation with quick sanction, low EMI, online application and more.
- Eligibility: Any Indian citizen can apply for an LIC HFL home renovation loan. Applicant should have a minimum age of 18 years and a maximum age of 65 years by the time of loan maturity.
- Fees and Charges: The general processing fee for a LIC HFL home renovation loan starts at 0.30% of the loan amount. Interest rates of LIC HFL home loan for renovation start from 9.60% of the loan amount.
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Frequently Asked Questions (FAQs)
What is the maximum limit for a home renovation loan for repairs?
The maximum loan amount depends on the bank and NBFCs. Generally, the maximum loan amount ranges from ₹50 lakhs to ₹1 crore.
Does a home renovation loan come under Section 80(c) of the Income Tax Act?
A loan taken to renovate a current house after the home renovation loan is approved or after the house has been let out/involved isn’t qualified for tax derivations under Section 80C.
What are the government schemes under home renovation loans?
Below are some government schemes under home renovation loans:
- Pradhan Mantri Awas Yojna
- Dr. B.R. Ambedkar Awas Navinikarn Yojna
- Maharashtra Housing and Area Development Authority Scheme (MHADA)
- HUDCO Niwas