Giving your home a fresh look often requires arranging substantial funds for remodelling and refurbishment. While self-financing minor repairs is possible, extensive renovations like remodelling the kitchen or adding new rooms typically need external funding. Availing loans specifically for home improvements has become easier in India with various banks and non-banking financial companies (NBFCs) offering tailored credit solutions.
From customisable personal loans and home improvement loans to secured lending options, loan providers offer access to sizeable capital to turn redesign dreams into reality. This article explores some of the most popular home renovation funding products currently on offer, which include personal loans, specialised improvement loans, secured loans, balance transfers and home loan top-ups.
Best Renovation Loans in India
The major types of home improvement loans on offer include the following:
1. Personal Loans
Personal loans are popularly used by individuals to finance home renovations in India. They provide applicants access to lump sum amounts typically up to a few lakhs through a simple application procedure without needing security or collateral. The flexible end-use nature of personal loans allows utilising the money for any kind of minor or major home renovation work like kitchen upgrades, bathroom remodelling, flooring, painting, additions and alterations, etc.
The flexible repayment tenure, typically up to 6 years, also makes personal loans affordable for applicants on small budgets. While interest rates are usually higher compared to secured loans, personal loans enable faster access to funds for urgent home improvement needs. The online application process via bank websites and loan marketplaces further adds convenience.
2. Home Improvement Loans
Many banks and NBFCs offer home improvement loans with tailored terms for renovation needs. These loans are often secured against the property and can cover a variety of expenses, such as installing modular kitchens, electrical and plumbing upgrades, adding rooms, or major repairs.
Home improvement loans come at competitive interest rates and lend higher amounts, going up to a few lakhs based on eligibility. Long repayment tenures, usually up to 15 years, ensure affordable EMIs for applicants. Quick online approval within a few days and minimal documentation make these loans highly appealing for home renovation needs.
3. Secured Loans
Secured loans enable applicants to access larger credit facilities by pledging existing property as collateral, making them suitable for major renovation projects. By offering assets as security, applicants can easily access lower interest rates and higher sanctioned amounts from leading loan providers.
If the renovation budget includes several lakhs for structural changes, secured loans prove cost-effective. Their long tenure also results in affordable EMIs. While they require submitting property documents and valuations, secured loans, due to the collateral pledged, provide funding even for people with low credit scores.
4. Balance Transfer on Credit Cards
Using the balance transfer facility on existing credit cards is another way to generate funds for minor home improvements. Many financial institutions offer cardholders pre-approved lending limits at lower interest rates for around 6-12 months.
Substantial savings can be achieved by transferring outstanding dues on other high-interest-cost cards to much lower-rate cards. The available credit can then be used to finance smaller home renovation expenses. Further, expensive renovation materials like furnishings, fittings, etc., can also be purchased on credit cards via easy EMIs to reduce the one-time cash outflow.
5. Top-Up on Existing Home Loans
If you have an existing home loan, you may be eligible for a top-up loan to finance renovations, provided you have a good repayment track record and sufficient equity in the property. Based on equity available in the property and a good repayment track record, additional credit at competitive interest rates is offered through the same home loan account without needing fresh approvals.
The existing home can be pledged as collateral for the top-up loan. The top-up amount gets merged with the main loan, leading to increased EMIs. However, it still proves more economical than taking out other high-interest debt for renovations.
Conclusion
Financial institutions in India offer a wide range of loan products specifically for funding home improvement plans - from personal loans and home improvement loan options to secured loans, balance transfers, and home loan top-ups. Each product has its own pros, cons and eligibility criteria in terms of interest rates, expenses covered and applicant profile. Shriram Finance offers personal loans that can be used flexibly for home renovation purposes. Applicants should carefully evaluate all available options based on their budget, existing loans, credit score, and income stability before selecting the most suitable home renovation loan.
Carefully evaluate all options based on your budget, existing loans, credit score and income stability before selecting the most suitable home renovation loan.
