Do you think a house is simply perfect with broken taps and chipped walls? No way, right? Almost all of us would like to live in a comfortable house, with ‘looks to die for’. Such a house gives us a sense of pride and also contributes to our quality of living. It’s said very rightly that a home gives a true account of ‘who lives within’.
With time, many people want to modernize their homes. They feel the need to make suitable changes such as repainting their homes, buying new furniture, increasing the size of their bedrooms and so on. But, many such home improvement ideas do not see the light of the day due to lack of funds. As you may have observed, home renovation works are getting costlier every day. This discourages people from moving ahead with any home improvement work even if they have the inclination for it.
This fact is acknowledged by most of the reputed lenders and they have also come up to seize upon the latent need of these people. Lenders such as SBI, HDFC and ICICI have devised attractive personal loan products to fund home improvement expenses. Loan seekers in India are also inclined more towards personal loans for their home improvement works instead of home loans, because of the inherent advantages associated with the former. We will discuss these details later in this blog.
What is a Home Improvement Loan?
Home improvement loans are an excellent means to strengthen the investment you have made already in purchasing your dream home. It can be used for any kind of repairs, updates and renovation on a property already constructed. You can avail these loans as and when you require to carry out any major/minor renovation work in your house. You can also use the funds to purchase furniture, bathroom fittings or for doing the interiors as well.
Features and benefits of a Personal loan for home improvement:
Some of the salient features of a home improvement loan are as follows-
- As you are aware of, you can use personal loans pretty much for any purpose. As a home improvement loan is a variant of a personal loan only, the lender is not at all bothered about the intended use of the funds approved. For example, let us suppose that you have availed a home improvement loan of Rs 6 lakhs for buying home furniture. Now even if you end up spending Rs 5 lakhs on purchasing furniture, your lender will not question you about the use of the remaining amount.
- Usually, you are asked by the lender to choose between floating and fixed interest rates. At times, you may also be offered a combination of these two rates as well. Under such an arrangement, the payables for the first few years will be calculated with a fixed interest rate and the remaining tenure will have a floating personal loan interest rate.
- As a usual practice, most lenders would cover up to 90 % of the home improvement cost. But if you have an excellent credit profile, some of them may even be willing to fund the entire renovation/improvement cost as well. You can be given the option to avail the funds in one go or in installments as and when you require them.
- Personal loans for home improvement often come with minimum documentation. This means you can forget those heaps of paperwork associated otherwise with any kind of loans. You just need to submit a few basic documents to get your loan approved.
- Many people are of the opinion that personal loans for home improvement often come at a higher interest rate as compared to that of a home loan. But, you can also get a personal loan for home improvement with a low interest rate if you have an excellent credit score and satisfy other eligibility criteria of your lender.
- Some lenders also offer free credit card schemes with these loans to add more value to the deal.
Why does a home loan often score below a personal loan for home improvement?
A home loan has some inherent disadvantages when compared to a home improvement loan. A home loan mostly covers 80 to 85 % of your estimated expenses. Also, you have to avail a home loan in the name of the future owner of the property to be purchased or in favour of the registered owner of an existing property. Now, if you are an elderly person in your late ‘50s, you may find it difficult to get a home loan approved. In this scenario, the lender will hesitate to consider your loan application as you are very close to the retirement age. Moreover, your children cannot avail the home loan on behalf of you.
Another definite disadvantage of a home loan is that you can not avail it for uses such as buying furniture or bath fittings. While approving a home loan, the lender wants to be absolutely sure about your intended purpose and ensures that you cannot use the funds for any other purposes. No such bindings are there with a personal loan for home improvement. Therefore, it’s no surprise that more and more loan seekers are opting for home improvement loans if they have urgent requirements for renovating their homes.
Advantages of Home Improvement Loans
Some of the advantages associated with home improvement loans are:
- Most of the lenders facilitate the online application of home improvement loans. Thus you are saved from making frequent visits to the banks/NBFCs.
- Borrowing funds to finance your much-awaited home improvement can be a cheaper option when compared to financing through credit cards. These days, most lenders offer attractive schemes and competitive interest rates on home improvement loans.
- Many lenders allow you to choose between fixed and floating rates, as per your suitability and convenience.
- Most lenders are quite flexible in how the funds are disbursed. They may disburse the funds in full or in installments, according to your preference.
- Some banks/NBFCs also offer other benefits such as free credit cards to sweeten the deal for their customers.
- Being a variant of personal loans, home improvement loans are synonymous with minimal paperwork.
- The home improvement loans allow you to attend to a home repair on an urgent basis as these loans can be availed in real quick time. You do not need to wait for an eternity for the funds to arrive before you can start your repair work. It’s always wiser to address a repair sooner than later so that you do not end up spending more on a ‘bigger damage’ on a later date.
Love your home? Then you can express the love for your ‘sweet home’ in your own unique way! Avail a home improvement loan and show the world ‘who lives in your home’!
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