Home Improvement Loan
Home improvement loans or home renovation loans are designed for the purpose of renovating a house and can be taken by a person who owns the property to be renovated. As the name suggests, these loans can be availed 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 similar fashion as a 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 bank’s 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.
Comparison between home improvement loans offered by various banks
|Name of the Bank/Lender
||Interest Rate (p.a.)
||Maximum Loan Amount
||Up to Rs.20 lakh
||Up to Rs.30 lakh
||Up to Rs.25 lakh
||12 to 60 months
||Up to Rs.2 lakh
|Punjab National Bank
||9.00% to 9.15%
||90% of market value
Features and Benefits offered by Home Improvement Loans
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 wherein 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, however, many banks that won't 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 banks ask for minimum documentation which means less paperwork 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.
Top Lenders Offering Home Improvement/Renovation Loans:
One of the top private banking institutions in the country, ICICI Bank offers a personal loan especially for refurbishing your home. Borrowers can avail this loan to give their homes a new makeover without having to worry about insufficient funds. Some of the main features of the bank have been listed below:
- Applicants can avail this loan online for quick approval and disbursal of loan. The entire process will take less than 72 hours.
- Borrowers need not provide any security to avail this loan.
- The home renovation loan from ICICI Bank comes at affordable interest rates starting from 11.25% p.a.
- The documentation required to avail this loan is minimal and borrowers can apply for this loan even from their smartphones by downloading the iMobile app.
Headquartered in Mumbai, the Dewan Housing Finance Corporation Limited (DHFL) has been offering easy access to affordable housing finance for more than three decades. With a home renovation loan from DHFL, you can refurbish your home the way you want it without giving a second thought about the finances. The home renovation loan from DHFL has the below-given features:
- The amount of loan that can be availed from DHFL for the renovation of your home will depend on your yearly income and your repayment ability. The loan amount can be increased by adding a co-applicant.
- Repayment of the loan can be made through post-dated cheques, ECS (Electronic Clearing Service), or NACH (National Automated Clearing House). The cheque mode of repayment is available only for locations where NACH or ECS facility is unavailable.
- Borrowers are eligible for reaping tax benefits on the home loan amount as per the existing tax laws.
- The EMI on the DHFL home improvement loans will be calculated on monthly reducing basis.
The personal loan for home improvement from Bajaj FinServ caters to the funding needs of home owners who wish to renovate their homes. The main highlights of the Bajaj FinServ Home Renovation Loan are given below:
- The loan application process is quick, and approvals can be received within 5 minutes.
- After the verification process is complete, it takes just 24 hours for the loan to get disbursed to your account.
- There is an option for borrowers to avail the ‘Flexi Personal Loan’ facility which will let them enjoy the flexibility of borrowing and prepaying according to their convenience.
- You can get a host of deals and pre-approved offers on home improvement loans from Bajaj FinServ.
The Home Improvement Loan Scheme offered by this public sector bank empowers home owners to redecorate their homes without having to worry about the expenses. Some of the main features offered by the Home Improvement Loan Scheme from Canara Bank are:
- Salaried individuals who wish to avail the home improvement loan from Canara Bank should draw a minimum of take-home salary (monthly) of 25% of their gross salary.
- The maximum amount of loan that can be availed will depend on the salary or yearly gross income of the applicant.
- The applicant has to provide the mortgage of the flat/house as a security to avail the home improvement loan from Canara Bank. Assets created out of the loan can also act as hypothecation.
- In cases where the home improvement loan is availed along with the housing finance, the loan amount will be disbursed only after the house or flat is built/acquired or after the repairs and renovations have been completed. In cases where the loan is availed independently, the proforma invoice must be produced for the loan to be disbursed.
Punjab National Bank
One of the oldest banks to be established in the country, Punjab National Bank has come a long way in terms of growth in customer base and business graph. Among its many finance-related offerings, the home improvement loan is quite a popular one and some of its features have been listed below:
- The home improvement loan from Punjab National Bank can be availed for the purpose of renovating a residential property owned by the applicant which can include repairs, roofing, tiling, flooring, woodwork, false ceiling, plumbing, electric work, etc.
- In the event of a cost escalation, Punjab National Bank offers the facility of the loan amount to be enhanced.
- The home improvement loan from Punjab National Bank comes with various options for repayment.
- Within three minutes of loan application, the loan process will be initiated, and the amount will be disbursed to the applicant’s account after the verification process is complete.
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.
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:
- Application form for the loan with passport size photographs.
- Latest Salary Statements and Form 16.
- Bank statements covering the last 6 months.
- IT/ITAO documents (for businessmen and professionals)
- All original title deeds of the property.
- A quotation from your architect on the estimated cost of renovation.
- An address proof and KYC (Know Your Customer) documents (Aadhar card, license, passports, ration cards, etc.
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 requests are made at the bank's discretion and can vary from one bank to the other.
Frequently Asked Questions on Home Improvement Loans
1. What is the minimum and maximum age limit for home improvement loans?
Answer: The minimum age of the applicant for home improvement loans should be 21 years while the maximum age should not exceed 65 years at the time of loan maturity. This can vary with lenders, for example, the maximum age limit for home improvement loan from Punjab National Bank is 70 years at loan maturity.
2. How much EMI do I need to pay towards my home improvement loan?
Answer: The monthly EMI towards your home improvement loan will depend on the quantum of the loan, interest rate, and repayment tenure. To ascertain the EMI amount, you can use the EMI Calculator tool available on the website of BankBazaar under the ‘Finance Tools’ section. The tool is also available on the websites of lenders.
3. Can I apply for a home improvement loan if I have not availed a housing finance loan?
Answer: Yes, you can apply for a home improvement loan independently without availing a housing loan.
4. Do I need to provide a security to avail home improvement loans?
Answer: The property to be renovated will be taken as a security for the home improvement loan. However, some lenders may not require you to provide any collateral or security.
5. How can I apply for home improvement loans?
Answer: Applying for home improvement loans have been made easy by many lenders who has made the process online. Borrowers just need to visit the official website of the lenders, fill up the application form, and upload a few documents. Once the verification is complete, the loan will be disbursed directly into the borrower’s bank account. Borrowers can also visit the office of the lender to apply for home improvement loans.
A GST rate of 18% will be applicable on banking services and products from 01 July, 2017.