“People usually are the happiest at home”
- William Shakespeare
The statement holds true, no matter where we live or how hard our day be, we always look forward to going back home to our near and dear ones. But our safe haven, also faces a lot of wear and tear due to various reasons, weather and pollution being a few. Hence to keep our abode strong and beautiful, it also requires makeovers and regular maintenance.
“Changing homes is not a sensible option either, sometimes a fresh paint job, new flooring or a simple renovation of the living room is sufficient to change the vibe,” said Rishi Anand, Chief Business Officer, Aadhar Housing Finance.
However in many cases people find it difficult to arrange funds for the makeover. But do not worry as now one can avail for a home improvement loan. “Home improvement loans are beneficial to spruce up your home. The availed loan amount can be used for a variety of purposes such as flooring, tiling, plaster, painting, extension of home, loft conversion, kitchen renovation, bathroom fitting, and garden design,” stated Monu Ratra, CEO, IIFL Housing Finance.
There are several reasons why you might want to consider renovating your home. If you are purchasing a property on resale, you may particularly need to upgrade your home before moving in. Navin Chandani, Chief Business Development Officer, BankBazaar, said, “Regular maintenance of the property also extends the life of the property. This makes a difference if you plan to sell your property in the future.”
Confirming this, Anand added that it is very important to know what kind of improvements generate the highest return on investment. However, lacking uniform rules, the appreciation varies according to the buyer and the market. “Investing in opening up the floor plan, exterior paint and landscaping provide a higher appreciation as the first impression is often the clinching factor in real estate deals. Changing kitchen and bathroom fittings and the house’s flooring too have a positive impact on the valuation of the property,” he further added.
When availing a home improvement loan from a housing finance company, you can choose a loan where your house is the collateral security. “Home improvement loans are granted for renovation in pre-owned property and the said property is mortgaged with us making it a secured loan. Interest rates are in line with home loan rate grid prevalent at the time of loan disbursal,” said Ratra.
In some cases you choose between the kind of loan you want to opt for—secured or unsecured. The choice can, however, have a major impact on the cost of the loan. In case of unsecured loans, you do not have to pledge any asset or collateral to the lender, hence the higher interest rate.
“Additionally, unsecured loans face greater scrutiny. You will have to comply with all the terms and conditions set by the lender, failing which, your application may get rejected,” stated Anand. Certain lenders will also offer you personal loans for the purpose of home improvement, leading to higher interest rate rates. “Personal loans for home improvement are unsecured loans where interest rates can vary from 9.99-36 plus per cent per annum depending on the credit evaluation and risk profiling of the borrowers by our fully automated mechanism,” confirmed Rajat Gandhi, Founder and CEO at Faircent.com.
You can avail a home improvement loan irrespective of a pre-existing home loan. Apart from some criteria like age and income, you would basically need to have property ownership in case availing for a home improvement loan. “It can be availed for the purpose of renovation in a pre-owned residential property and not for moveable items, which do not add value to the property. Also it should be backed by an estimated cost of renovation approved by an architect or contractor,” said Ratra.
Although a prior relationship is not necessary for availing this loan, but being an existing customer can prove to be advantageous.
However, if the home improvement loan is availed along with the housing finance, the loan amount will be disbursed only after the house or flat is built or acquired, or after the repairs and renovations have been completed,” said Chandani.
A home improvement loan can be sought individually as well as jointly. Adding a co-applicant can help in maximising the loan amount, while. a female co-applicant also helps in getting a better interest rate.
The loan repayment tenure can be decided by the customer after consulting the lender. Secured loans have a longer repayment tenure, but lenders typically do not offer loans with duration of more than 20 years.
In case of working professionals, the repayment tenure cannot be extended beyond the retirement age of 60, and 70 for the self-employed. “Applying for home improvement loans have been made easy by taking the process online. Once the verification is complete, the loan will be disbursed directly into the borrower’s bank account,” further stated Chandani.
However, with increasing loan value, the paperwork also becomes complex, since the house for which the home improvement loan is taken becomes the collateral for the loan. Therefore in such cases, you may have to visit the branch office.
Our home, which houses our precious memories deserves improvement and is definitely worth the money.