How is the Loan Amount Determined for a Gold Loan for Renovation?

For gold loans taken for home renovation purposes, the key factor that decides the loan amount sanctioned is the quantity and quality of gold jewellery pledged as collateral.

The usual steps followed by loan providers are:

•  The gold ornaments to be pledged are evaluated to ascertain their weight and purity. Quality certification may be required.
•  The current market price of gold per gram as per carat is then applied to calculate the market value of the total gold.
•  As per RBI regulations, a maximum of 75% of this market value of gold can be sanctioned as the loan amount.
•  The exact percentage of market value given as a loan varies between 60-75% across different loan providers.
•  Applicant's income and creditworthiness are also considered to determine repayment capacity.
•  The approved loan amount is disbursed to the applicant's bank account.

Therefore, the quantity and quality of gold pledged primarily determine the gold loan amount you can get to fund your home renovation needs. Compare financial institutions to get the best Loan-to-Value (LTV) ratio.