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  • Home Improvement Loan (Home Renovation Loan) is Rated as "Great!" by 90360 Users
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    rated 4.0/5.0 by 90360 users

    Home Improvement Loan (Home Renovation Loan)

    What is Home Improvement Loan?

    Home Improvement Loan

    Personal Loan for Home Improvement

    Home improvement loans are designed for the purpose of renovating a house and can be taken by a person who owns the property to be renovated. These loans are given for a maximum term of 15 years and interest charged on these loans lies in the range of 9.5% to 10.5% per year. Processing fee for home improvement loans ranges between 0.5% to 1% of the total loan amount.

    Perfect Personal Loan Deals for you

    Home renovation loans, as the name suggest, are loans that you can take if you wish to get work done on a property that has already been constructed. These loans help you renovate your house as and when required and works in a fashion similar to the home loan. It can be taken for up to 15 years, or more, and paid back in equated monthly instalments (EMIs). The maximum duration, however, can change depending on the banks policies. Apart from major work that needs to be done in a house, these loans can also be taken to help you furnish your house and pay for things like bathroom fittings, fans, furniture, etc.

    Home Improvement Loan Eligibility Criteria

    Each bank will have its own eligibility criteria for the loans they offer but the gist of these are:

    • You can apply for a home renovation loan as an individual or jointly with the other owners of the house being the co-applicants.
    • Salaried and self-employed individuals can also apply for these loans
    • The minimum age requirement for this loan is that you should be at least 21 years of age. The maximum age is limited to your retirement age. This means that the loan tenure cannot exceed your retirement age. For salaried individuals the age limit is 65 years for most banks.
    • Even companies can apply for this loan provided they have been in operation for a predefined minimum period.
    • Companies applying for this loan may also be required to be in a position where they have been making profits in the last few years.
    • All the owners of the property will have to be co-applicants for the loan.
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    Documentation Required for Home Renovation Loan

    The documents that will be required for you to be able to avail the home improvement loan will depend on the finance house that you approach. Some of the common documents needed are:

    • The first document will be the application form for the loan with photographs.
    • Both salaried and self-employed people may be required to submit salary statements.
    • You may also need to provide bank statements covering the last 6 months.
    • You may be asked to provide Form 16s and IT returns or ITAO documents.
    • All the original deeds of the property will also be required by some banks. You may be required to submit just the copies but originals might be required for the purpose of verification.
    • You must also submit a quotation from your architect on the estimate on how much the renovation is going to cost.
    • An address proof will also be required. This can be a drivers license, passports, ration cards, etc.
    • In some cases an identity proof may also be asked for which can be drivers licenses, Aadhar cards, passports, phone bills etc.
    • Pan cards, drivers licenses, Aadhar cards and passports can also be submitted as proof of age, if required.
    • Some banks may require that you take out an insurance policy on the house to cover the loan amount and name them the sole beneficiaries for it. In such cases you will have to provide the policy documents too.

    These are the most common documents that most financiers/banks will ask for. It may be so that in some cases you will have to submit just a few of these documents while in others, more documents may be requested. Such request are made at the bank's discretion and change from one bank to the other.

    Home Improvement Loan Interest Rates

    When it comes to interest rates, most of the banks and finance houses offer you two choices. The first is a fixed rate of interest and the other is floating interest rate.

    • Fixed interest rate

      The fixed interest rate is when the rate of interest is fixed before the loan is approved. This interest rate will remain fixed for the duration of the loan. The general band for this interest is between 9% per annum and 12.5% per annum. The exact rate, of course, will depend on the bank you take the loan from. The interest rate may also change depending on your employment situation. Salaried individuals tend to get offered lower interest rates as compared to self-employed applicants.

    • Floating interest rates

      The floating interest rate is an interest rate that is linked to the prime lending of the bank. This prime lending rate is affected by the repo rate (the rate at which the banks borrow money from the central bank) and can fluctuate. The advantage of the floating interest rate is that it tends to be a bit lower than the fixed interest rates. It does not generally exceed the fixed interest rates and even if it does, it generally does so for a short period.

    If your loan comes with a fixed interest rate and you wish to switch to a floating interest rate, then you can do so by paying a fee. The option is generally provided at the discretion of the bank.

    Features and Benefits of Home Renovation Loans

    Home loans that are meant to help refurbish your house offer a lot of features and benefits that are meant to make the loan easy to take and manage. Some of these are:

    • Many banks offer choices between fixed and floating interest rates that are meant to give you the choice of an interest rate that suits you. This does not mean that you get to choose the amount of interest. It means that you have a choice in the way the interest is calculated.
    • In some cases banks may offer a combination of the two interest rates where in the first few years will be a fixed interest rate and the remaining tenure will have a floating interest rate.
    • For most of the banks, you can apply for the home renovation loan online thus negating the need for you to journey to the bank itself.
    • As far as the loan amounts are concerned, some banks will cover the entire cost of the renovations. There are some banks that wont cover the entire cost but even then they may cover up to 90% of the cost.
    • In certain cases the bank may issue the entire loan amount in one lump sum or in instalments as and when it is needed.
    • Some banks also offer free credit cards with these loans to sweeten the deal.
    • Many of the banks ask for minimum documentation which means less paper work for you.
    • There is no need for you to have a prior relationship with the bank in order to avail this loan however, being an existing customer can have advantages. Some banks offer up to 80% of the required amount to new customers but 100% of the required amount to existing customers.

    FAQs

    Q. What is the loan amount that I can take?

    A. The amount that you can borrow will depend on the banks policy. Some banks will offer up to 90% while others may offer to cover 100% of the cost of renovation.

    Q. Are there any income requirements for these loans?

    A. Yes. Each bank has its own income requirement which are specific to salaried and self-employed applicants.

    Q. If I have taken a loan with a fixed rate of interest, can I switch to a floating interest rate?

    A. Yes. Some banks do allow you to switch between fixed and floating interest rates. However such switching may require you to pay a fee.

    Q. I am 60 years old. Can I take this loan for 15 years?

    A. No you cannot because most banks consider the retirement age to be between 65 years and 70 years and your loan tenure cannot exceed the retirement age.

    Q. Is there a processing fee for these loans?

    A. Yes. These loans do come with processing fees. The exact amount will depend on the bank providing the loan.

    Q. When do I pay the processing fee?

    A. In most cases, you will have to pay the processing fee while applying for the loan. The payment can be made with a cheque which is to be submitted when you submit all the other documents for the loan.

    Q. What happens if my house is destroyed or damaged by a natural calamity while the loan is still being paid back?

    A. There is no doubt that in such an instance you will be at a disadvantage since the repayment of the loan will have to continue and youll need to rebuild/repair your house. It is best to use an insurance policy to cover such eventualities.

    Q. How can I ensure that the loan is repaid even if something were to happen to me?

    A. There are many insurance products that will help you cover the outstanding loan amounts so that your loans dont become a financial burden on your family. It would be best to take one of these insurance policies to cover the loan.

    Q. Is prepayment allowed for home renovation loans?

    A. Yes. However the terms and conditions governing prepayments will differ from one bank to the next so it would be best to consult your bank before deciding on prepayments.

    Q. I dont own the house but want to be a co-applicant for the loan. Is that possible?

    A. Yes. Co-applicants for a loan need not be own the house for these loans however, all co-owners need to be co-applicants for this loan.

    Home Improvement Loan Reviews

    • HDFC Bank Personal Loan
      "Good Loan"
      0.5 5.0/5 "Blown Away!"
      With the HDFC bank recently I have Taken Personal Loan compared to other banks service and the Interest rate Hdfc bank is providing good service, Customer is very helpful Clearly Informed about the Loan details,documents where collected and submitted on time,The Loan which I have expected was not Given but this affordable amount to use. Overall the HDFC banking service for customers is Good.
      Was this review helpful? 0
      , hyderabad
      Reviewed on Feb 19, 2018
    • Bajaj Finserv Personal Loan
      "Good service"
      0.5 4.0/5 "Great!"
      Got the personal loan from the BAJAJ FINSERV around 6y months ago. The customer support service is good with the BAJAJ FINSERV and they have offered me they have sanctioned the required loan amount and I am satisfied with it. The rate of interest and the charge are pretty high with the BAJAJ FINSERV personal loan.
      Was this review helpful? 0
      , hyderabad
      Reviewed on Feb 19, 2018
    • Capital First Personal Loan
      "Good overall"
      0.5 5.0/5 "Blown Away!"
      I have taken a personal loan from Capital first and I am happy with the experience. The customer services are good and the documentation on time. The rate of interest is low. It is of 10.25%, where as the other banks are charging 11.25%. The processing charges are normal too.
      Was this review helpful? 0
      , bangalore
      Reviewed on Feb 19, 2018
    • Kotak Personal Loan
      "Unnecessary additional charges"
      0.5 0.5/5 "Unacceptable"
      Very unprofessional. They had recorded my bank details wrongly and because of the ecs payment was failing every month .. I have been doin the payment manually every month . And on top of that they charge u OD charges stating tat the ecs payment bounced .. i hav been telling them U hav taken the account details wrongly and so it bounced , now because of low balance or anything. They are not keen on updating the correct details as well.. every two months they call and ask me to pay the OD charges of 1000+.
      Was this review helpful? 0
      , bangalore
      Reviewed on Feb 18, 2018
    • HDFC Bank Personal Loan
      "Nice experience"
      0.5 4.0/5 "Great!"
      My personal loan is with HDFC Bank. It was a good experience and there were no issues in the process. The customer services are good and there are no hassles in the process. The interest rate and charges are also normal and overall a smooth experience.
      Was this review helpful? 0
      , mumbai
      Reviewed on Feb 17, 2018
    • Bajaj Finserv Personal Loan
      "Personal loan with BAJAJ FINSERV"
      0.5 5.0/5 "Blown Away!"
      I have taken a personal loan from BAJAJ FINSERV. The approved loan amount was 4 to 5 lakhs. The rate of interest comes around 12 to 13 %. The monthly EMI is 9000 which i have to pay for 36 months. There was some processing fee and charges with BAJAJ FINSERV.
      Was this review helpful? 0
      , ahmedabad
      Reviewed on Feb 17, 2018
    • Bank Bazaar Personal Loan
      "Excellent"
      0.5 5.0/5 "Blown Away!"
      My personal loan was taken via BANK BAZAAR.The customer service and responses was up to the mark. I have applied through their website which has many good options on banks and Interest rate. My overall experience was really good so I would like to recommend this site to others.
      Was this review helpful? 0
      , hyderabad
      Reviewed on Feb 17, 2018
    • Kotak Personal Loan
      "Good service"
      0.5 4.0/5 "Great!"
      I have taken my personal loan with KOTAK BANK. The loan amount was 3.5 lakhs and the Interest rate was 16.75% which is very high than other banks. The tenure period was 4 years. The loan process was smooth and hassle free. They have provide door step service for collecting documents.
      Was this review helpful? 0
      , hyderabad
      Reviewed on Feb 17, 2018
    • Bank Bazaar Personal Loan
      "Excellent"
      0.5 4.0/5 "Great!"
      My loan was taken with BANK BAZAAR .The customer service and responses was up to the mark. The website is user friendly and easy to navigate . The web portal's accuracy and speed is good so I would like to recommend to others. My overall experience was excellent.
      Was this review helpful? 0
      , mumbai
      Reviewed on Feb 17, 2018
    • HDB Financial Services Personal Loan
      "Very good"
      0.5 4.0/5 "Great!"
      My personal loan was taken with HDB finance. The loan amount was 2.24 lakhs and the interest rate was 13% which is average . The tenure period was 5 years. The loan process was good and they have sanctioned the loan with the committed time. My overall experience was very good and its recommendable.
      Was this review helpful? 0
      , mumbai
      Reviewed on Feb 17, 2018
    • Standard Chartered Bank Personal Loan
      "Interest rate was high"
      0.5 2.5/5 "Just OK"
      I have taken a personal loan from STANDARD CHARTERED BANK. The approved loan amount was 4 lakhs. The rate of interest comes around 15% The interest was high. The monthly EMI is 12000 which i have to pay for 3 to 4 years. After 1 year the pre closure charges will be 3% of the total outstanding amount.
      Was this review helpful? 0
      , ahmedabad
      Reviewed on Feb 17, 2018
    • Bajaj Finserv Personal Loan
      "High charges"
      0.5 4.0/5 "Great!"
      My personal loan is with Bajaj Finserv. The process was okay. They showed up one thing and they charged another thing. I was told that the interest rate is of 20% and they charged 28%. I was told 16%. They need to be more consistent and clear when it comes to charges.
      Was this review helpful? 0
      , bangalore
      Reviewed on Feb 17, 2018
    • HDFC Bank Personal Loan
      "Excellent"
      0.5 5.0/5 "Blown Away!"
      It was an excellent experience with HDFC Bank for the personal loan. The customer services are good and the rate of interest is low and the best is that the bank show what ever they charge. There is nothing hidden. The process was good and the documentation process was really smooth.
      Was this review helpful? 0
      , bangalore
      Reviewed on Feb 17, 2018
    • Bajaj Finserv Personal Loan
      "Process is good, but high on charges"
      0.5 5.0/5 "Blown Away!"
      I got a over draft loan from Bajaj Finserv. The customer services are good and there were no issues to get the loan through. They have a limit for a customer and the customer can use the loan as much as needed. The rate of interest and charges are high when compared.
      Was this review helpful? 0
      , mumbai
      Reviewed on Feb 17, 2018
    • HDFC Bank Personal Loan
      "Process is easy"
      0.5 4.0/5 "Great!"
      My personal loan is with HDFC Bank and the process was easy as thee was minimal documentation. The rate of interest and processing charges are normal. I have no hassles in the after loan services too. Being an existing customer there is no issues with the bank.
      Was this review helpful? 0
      , pune
      Reviewed on Feb 17, 2018
    • ICICI Bank Personal Loan
      "Good"
      0.5 3.5/5 "Pretty good"
      I have taken my personal loan with ICICI bank 4 years back.The loan amount was 4 lakhs and the Interest rate was 16%which is very high than other banks.The tenure period was 48 months. The loan process was every good which is satisfactory . They have provided door step service for collecting documents .
      Was this review helpful? 0
      , bangalore
      Reviewed on Feb 17, 2018
    • Bank Bazaar Personal Loan
      "Excellent"
      0.5 4.0/5 "Great!"
      BANK BAZAAR is a good platform for all the financial products . The customer service and responses was satisfactory . The website was really amazing with good features and I have tried using the tools like EMI calculator , credit score option which is amazing.My overall experience was excellent.
      Was this review helpful? 0
      , bangalore
      Reviewed on Feb 17, 2018
    • Tata capital Personal Loan
      "Good"
      0.5 3.0/5 "Satisfactory"
      My personal loan was taken with TATA CAPITAL.. The loan amount was lakhs and the Interest rate was 11.99% which is avergae . The customer service and responses was good. The tenure period was 5 years . I am satisfied with the loan process here and my overall experience was good.
      Was this review helpful? 0
      , bangalore
      Reviewed on Feb 17, 2018
    • Tata capital Personal Loan
      "Good"
      0.5 3.0/5 "Satisfactory"
      My personal loan was taken with TATA CAPITAL.. The loan amount was lakhs and the Interest rate was 11.99% which is avergae . The customer service and responses was good. The tenure period was 5 years . I am satisfied with the loan process here and my overall experience was good.
      Was this review helpful? 0
      , bangalore
      Reviewed on Feb 17, 2018
    • HDFC Bank Personal Loan
      "Good"
      0.5 2.0/5 "Expected more"
      Before, I have taken the personal loan with the HDFC bank.Customer service was not good one with the HDFC bank. I would like to say that the processing charges is on higher end. Everything is good one with the HDFC bank.
      Was this review helpful? 0
      , kolkata
      Reviewed on Feb 17, 2018
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