Home Renovation Loan

Do you want to renovate your home? Are you looking for a reasonable home renovation loan? Check out the different home renovation loan interest rates and possibility of getting home improvement loans with bad credit. Read on to find your eligibility and the home renovation loan documents required to ensure a seamless process.

Home Renovation Loan Details

Some things never change. One thing that remains the same in this ever-changing world is that buying a home is still considered a landmark. Undoubtedly, it is an accomplishment. It is your most prized possession. A home reflects your personality. It gives an expression of your personality and tastes. Many times, your budget is limited to your home and nothing beyond. This is when Home Renovation Loan comes into the picture.

Home Renovation Loan is similar to any other loan that helps you to give a facelift to your home. It helps you to repay the affordable amount monthly for a longer period with low-interest rates.

In simple words, it is financial aid to help you to revamp your home.

Home Renovation Loan Interest Rates

Reconditioning and upgrading your home requires enormous money, passion and time. It is a huge expenditure, and paying it with your regular income is a challenge. The financial institutions have recognized this need of the consumers. Hence, they have come up with a new scheme of loans called the home renovation loan. 

As the name suggests, a house renovation loan comes to help the customers to revamp and remodel their house. The loan is generally given to the consumer, who is registered as an owner of the property. 

The home renovation loan comprises painting, reshaping, internal and external services and even major work such as building a floor.

The maximum period for a house renovation loan is 15 years.

There are two types of home improvement loans interest rates — These include - fixed and floating interest rates to facilitate, comfort and satisfy the consumers.

Fixed Interest Rates

The fixed interest rate home renovation loan is a loan where the interest rate remains constant for the entire duration of the loan. The interest remains stable irrespective of market fluctuations or any other variation. This brings a sense of assurance in repayment schedules and patterns. This is good for those who have a good budget and want a periodic and fixed repayment. However, the total interest on mortgages under fixed interest is higher as compared to floating interest rates.

Floating Interest Rates

The floating interest rates change from time to time depending upon the market behaviour. It floats or rotates reflecting the economic conditions of the market. It also changes when the lender’s guidelines change. The floating interest rate is lower than the fixed interest rate.

Also Check - Home Loan Interest Rate

Documents Required  For Home Renovation Loan

Every important thing is linked with paperwork. The home renovation loan documents required are as follows:-

  • Appropriately filled application form
  • Passport size photographs
  • Identification Proof
  • Proof of the residence
  • Age proof
  • Income Proof/ Bank Statement
  • Documents related to property
  • Quotation of the approximate cost of renovation

The above list is incomplete. Fresh documents might be required based on the applicant’s profile and the lender’s criteria.

It is recommended to apply for a home renovation loan from the bank where you already have a home loan. This will lead to less paperwork and other hassles. The home loan documents required by the bank can be used for house improvement loans.

Also Read - Income Tax Documents Required for Home Loans

Home Renovation Loan Eligibility Criteria

The basic criteria to find out if you are eligible for a house renovation loan is as follows - 

Age Criteria                       Minimum 21 years and maximum 70 years
Type of job                         Salaried / Self-Employed
Credit Score                       750 or above

A credit score tells about the worth of the creditor. It tells the lender the potential of the borrower to repay the loan. Home Improvement loans with bad credit scores are generally not sanctioned. If at all they are approved, the limit of funds will be low, and the rate of interest will be high.

Also Check - Eligibility Criteria for Home Loan

Features For Home Renovation Loan

Below mentioned are the important features for a home renovation loan.

  • A high loan to value(LTV) ratio is as high as 100 per cent or 90 per cent of the property loan, whichever of the two is lower. The LTV generally measures the risk to a lender when he has to sanction a loan to the borrower.
  • The interest rates are appealing.
  • Availability of loan facility for the period as long as 30 years.
  • The convenience of balance transfer facility - The balance transfer facility is generally any loan facility, which is transferred from one lender to another to derive a lower interest rate from the latter. This convenience is generally given by all leading financial institutions.

Check for 50 lakh home loan EMI and apply easily on MyMoneyMantra.

Benefits For Home Renovation Loan

  • Fair and a huge amount of home loan tax benefits. (A home loan tax benefit is a benefit given to you on the interest which you pay for your loan against property. In much simpler words, it means the reduction of your tax bills in the form of credit, withdrawal or suspension depending on the condition it satisfies)
  • The facility of a house renovation loan is available to both new and current consumers.
  • No or very little paperwork is available to current consumers.

Also Read - Tax Benefit on Second Home Loan

Home Reconstruction Loan Fee & Charges

The following are some of the Home reconstruction Loan Fee and charges from top banks: 

HDFC Home Improvement Loan

Loan Amount:- If you want to claim a home renovation loan, you can register for a personal loan and the total amount offered as a loan will be Rs. 40 lakhs. (Terms and conditions applied).

Interest Rate:- The interest rate on Home Improvement Loan starts from 7.10 per cent and more.

Processing Fee:-0.5 per cent of the money that has been lent by the bank or Rs.2000/, plus taxes, whatever is higher.

SBI Top UP Home Loan

Loan Amount:- The loan amount varies between 3 lacs to 5 crores.

Interest Rate:-The interest rate varies according to various slabs of the loan amount, with the effective rate ranging from 9.8% to 10.05%.

Processing Fee:-0.35 per cent of the money lent by the bank (Rs.1500/- minimum amount and Rs,10,000/- maximum amount).

ICICI Bank Personal Loan

Loan Amount:-The loan amount ranges between Rs.50 thousand to 15 lacs. It depends on your income and paying potential).

Interest Rate:- The interest rate starts from 11.49%.

Processing Fee:-The processing fee varies between 2 per cent to 2.25 per cent, determined by the company you work for and the place it is situated.

Also Read - 5 Home Loan Providers in India That Charge Zero Processing Fees

Home Renovation Loans Provided By Different Banks

There are several banks that offer house renovation loans for a complete overhaul of homes. Below is the list of the famous banks that provide house renovation loans.

PNB Housing Home Renovation Loan

PNB provides home reconstruction loans for its consumers. Home improvement loans help you financially to refurbish and restyle your residential property.

Loan Amount:- Up to Rs.1 crore.

Interest Rate:- The interest rate starts from 6.55 per cent.

Processing Charges: There are no processing fees until 31st Dec 2021.

ICICI Bank Home Improvement Loan

ICICI Bank provides house renovation loans to recondition and reshape homes. 

Loan Amount:- You can enjoy a grant of approximately 50 thousand to 25 lakhs.

Interest Rate:-The interest rate varies, starting from 11.49 per cent.  

Processing Fee:-The processing fee varies between 2 per cent to 2.25 per cent, determined by the company you work for and the place it is situated at.

Home Improvement Loan can be applied through various means such as SMS (5676766),    iMobile (Mobile App of ICICI bank) or get it done personally by visiting the nearest ICICI branch.

The operations procedure and distribution of loans are simple and quick. The loan gets transferred to your account in 72 hours.

HDFC Bank Home Improvement Loan

HDFC bank has guaranteed a stress-free and convenient documentation process for house improvement loans. Through this loan, HDFC helps to revamp your home.

Loan Amount:- You can enjoy a maximum loan of Rs.40 lakhs (terms and conditions applied).

Interest Rate:-The interest rate is 7.10 per cent and more. 

Processing Fee:- 0.50 per cent of the amount that is lent and applicable taxes or Rs.2000/, plus taxes, whatever is higher.

Bank of Baroda Home Improvement Loan

Bank of Baroda approves loans to all those consumers whose house is not older than 35 years.

Loan Amount:- You can enjoy a maximum loan of 5 crores in metros with the exception of Mumbai, where the loan amount can go up to Rs.10 crore loan. In the semi-urban area, the loan amount is Rs. 1 crore.

Interest Rate:-The interest rate is 6.50 per cent to 8.25 per cent.  

Processing Fee:- The processing fee is divided into two slabs - 

  • Below 50 lakhs: the fee is 0.5 per cent (Minimum Rs. 8500 and max Rs.15000)
  • Above 50 lakhs: the fee is 0.25 per cent ( Minimum Rs. 8500 and maximum is Rs. 15000).

Also Read - Home Loan Disbursement Process

Application Process For Home Improvement Loan

For the application for a home, a reconstruction loan goes to the home loan section online, and you can apply in three easy and quick steps. The home loan eligibility and home improvement loan criteria are the same for the application process. 

Enter your details

  • Share your personal information and the particulars linked to your loan necessities.

Go through various offers 

  • As per the details shared, go through a list of worthy and qualified lists of home loan offers that will appear. 
  • Analyze the processing fee, interest rates and suitable home loan amount from the list of appropriate home loan offers.

Submit the application

  • Comply with that home loan application that goes well with your loan requirements.
  • Once your home loan application is acknowledged, you will get approval for your home loan along with a reference number for your future correspondences.
  • Our loan specialist will get in touch with you in the next 24 hours to take the application ahead for further processing.

Also Read - 5 Benefits of Taking a Home Loan

Best Value Home Loans

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Home Renovation Loan FAQs

✅Is prepayment allowed for a home renovation loan?

Prepayment is a term used when the borrower pays back its outstanding loan funds either partially or fully before the term period.
Prepayment is not allowed as per the regulations laid down by the Reserve Bank Of India. RBI does not permit the banks to lay prepayment penalties on house improvement loans.

✅Is there any processing fee for a house renovation loan?

Yes, there is a processing fee for a house renovation loan. The amount varies from bank to bank and also your loan amount. The processing fee ranges from ½ per cent to 1 per cent of the total amount that has been lent.

✅What is the guarantee that I will have to furnish for a House Renovation loan?

The security for a house renovation loan differs from bank to bank.

HDFC Bank: HDFC bank generally levies security interest on the property they fund or any other short-term security, as the bank requires.

Bank of Baroda: Bank of Baroda security norms are security against the mortgaged property. If the mortgage is not possible, the bank can ask for security in gold, shares, debentures, government promissory notes, and insurance policies.

ICICI Bank: This bank does not require a guarantee or security for Home Renovation Loan.

✅When can I utilise payment for House Renovation Loans?

Generally, the disbursement policy for the house renovation loan is swift.

For self-employed, it takes around 7-8 days.

For salaried disbursements take 4-5 days.

✅Is there any difference between the house renovation loan and home loan interest rates?

The interest rate of a house renovation loan is slightly higher than that of home loan interest rates.

This increase in rate is contributed to the “risk” future. Since a home renovation loan interest rates is based on the future value(after enhanced value) is done, it is a bit of a risky deal. Hence, the interest rates are slightly higher.

✅Who can avail of House Renovation Loans?

Anyone who wants to reshape and revamp his house and fulfil the below requirement can avail of a house renovation loan.

Age should be between 21 years (minimum) and 70 years(maximum).

Type of Work can be self-employed or salaried.

The credit score should be 750 or more.

In addition to the above, the borrower’s income, assets owned, liabilities etc. will be assessed.

✅Do I get Tax Allowance for House Improvement Loans?

Yes, If you own a house and have taken financial aid from a financial institution, then you are eligible for the tax benefit limited to Rs. 30,000 a year.

If it is a rented house, the entire interest will be deducted.

So the tax officers suggest you keep bills of the cost incurred for renovation as evidence of the expenses involved.