Setting up your new house or renovating an old one can be as daunting a task as it is exciting, particularly when it comes to handling finances. More significant tasks such as remodelling, renovation and furnishing can be super expensive. A housing loan is a good option for renovation and improvement work. You can use it to enhance your home in several ways such as internal & external plaster, tiling and flooring, painting, etc.
Many borrowers apply for a home loan to fix the maintenance and other improvement work of their homes. Investing money in home renovation is an excellent idea with a long-term perspective. Housing loans in India provide you with financial benefits and tax benefits.
Here are top 8 reasons for opting for a home renovation loan –
1. Easy qualification criteria:
The eligibility criteria for a home improvement loan is quite simple. Thus, making it easy for you to qualify for the loan. You need to be an Indian resident aged between 25 and 58 years, and you must be employed with a public, MNC, or private company to qualify for the housing loan.
2. Minimal Documentation:
Home improvement loans require simple documentation when compared to other modes of finance. All you need is essential documentation such as property title deed, identity/income proof, and photographs.
3. Simple application process:
The application process for a housing loan in India is easy, and you can complete it online or offline. To apply online, you need to submit your personal, financial and employment details and then enter the loan amount and tenure over which you want to repay the loan. After filling all the information carefully, you have to submit the required documents. After the verification of your application, you will receive the amount in your account.
4. Quick Disbursal:
Housing loans are processed quickly as the documentation is minimal. So you can easily get your renovation work started at the earliest without having to wait for a long duration to get your loan application approved.
5. Lower EMIs:
If you borrow the loan on a lower interest rate for a more extended period, your EMIs will be of a lower amount. You will pay a lower EMI every month compared to getting a loan on a higher interest rate. Getting a loan at a lower interest rate with the lowest EMI will be a boon if you are a salaried individual.
6. Tax Benefit:
Under Section 24, you can avail a deduction up to Rs. 30,000 per annum for the interest that you pay on a home improvement loan. This deduction of Rs. 30,000 is within the total limit of Rs. 2 Lakhs available on loan interest payment of self-occupied homes. Thus, interest payments on a home purchase and home renovation loans put together qualify for a deduction of up to Rs. 2 lakh. The deduction could result in a tax saving of up to Rs. Ten thousand three hundred thus reducing your overall cost of borrowing.
7. Flexibility to use:
The funds that you get for availing a home renovation loan can be easily used to extend a couple of rooms in your home. You can make a new balcony, or expand the covered area of your house. If you managed to save money from this renovation and extension work, you could use it to add new closets in your room or improve your kitchen doors and cabinets. Thus, the home improvement loan offers you flexibility and the freedom to use it for multiple improvement work.
8. Lower rate of interest:
One of the most significant advantages of securing a home improvement loan is a lower and fixed interest rate. Besides, in home improvement loans, you will have to pay a fixed rate of interest. If you calculate a lower interest rate on a higher amount for a longer period, you will save a hefty amount in the long-term. When you are paying a lower rate of interest for a longer period, paying the loan amount becomes more manageable and rewarding.