I am planning to renovate my home. It is mostly like extending two of the small rooms. I also want to have the entire interiors redone. So is there any specific home loan for this? Like construction loan?
If there are needs, there are loan schemes. Home improvement loan or home renovation loan is pretty popular product especially when people are becoming more status and style conscious. The loan is called “Home Improvement Loan” by financial institutions. It is offered by all public sector as well as private banks.
As far as extending two new rooms are concerned, you have to speak with the bank on whether this would be available. In most of the cases, banks provide loan along with the home improvement loan for this purpose.
It would be prudent for you to do your research on interest rates offered by banks for home improvement loan. There are variations in interest rates charged by banks.
You could take a home improvement loan. The basic eligibility criteria for most home improvement loans are quite simple. Any existing Home Loan borrower who has completed at least one year of repayment of their loan can apply for the improvement loan. Generally, the value of the improvement loan is about 80% of the appreciated value of the property and can be availed from the same lender who gave you your Home Loan. Even new borrowers can apply for the home improvement loan. The terms might differ from one lender to another.
Use a home improvement loan if you want to carry out subsequent improvements and modifications in a house bought on a Home Loan. An improvement loan is available at interest rates that are close to Home Loan rates. Additionally, the improvement loan has a longer repayment tenure, making the EMI more affordable for the borrower who, as such, would be paying the original Home Loan instalments. However, note that the tax benefit for this loan will be restricted to Rs. 30,000 per year and only the interest repaid can be claimed as a tax deduction under Section 24B. Also, this will come under the overall limit of Rs. 2 lakhs under Section 24B.
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