Factors That Influence Your Home Renovation Loan Costs

Renovating your home is costlier than you might imagine. If you have plans to renovate your home this year but don’t have enough liquid funds to meet your needs, you might want to consider a loan for home renovation. Whether you have just bought a new house and wish to turn it into a home or you’re giving your current home a makeover, taking out a loan for renovation is the most efficient way to go about it without burning a hole through your savings.  

Importance of a Loan for Home Renovation 

Paying the entire sum for a major home remodel can be an emotional journey. Indian households usually save up for emergencies, and spending all their savings can leave them vulnerable and discouraged. 

Thanks to the loans for home renovation, you can now rest easy, get your house remodeled and keep your savings handy for a rainy day. Until recently, people were unaware of loans for home renovation and directly opted for other options whenever they had similar requirements. However, loans for home renovation differ fundamentally. Popular substitutes people turn to are home equity loans and cash-out refinances. But neither of these options has been made for home renovations specifically. 

On the contrary, a home renovation loan is based on the new value of your property once the renovation is complete. The result of this valuation can increase your borrowing capabilities significantly. It enables homeowners to access their future asset value while giving them the lowest possible rates. Regarding the final loan amount, you always have the scope to negotiate your rates and get a lower interest rate. However, other factors, like your income and credit history, will also be considered.  

Things to Keep In Mind While Applying for a Loan for Home Renovation 

  1. Ensure a high credit score:

All financial institutions prioritize a borrower’s credit score and credit history. It provides proof of the borrower’s repayment capabilities and assures the lender that the borrower will return their investment without complications.

  1. Keep your documents and ID proofs handy:

Once you have chosen the loan provider for your needs, ensure all your financial documents are ready to present as and when required. It includes:

  • Identity proof: Passport, Aadhar Card, PAN Card, or Voter ID
  • Address proof: Passport, Aadhar Card, Voter ID, or utility bills
  • Income proof: Tax returns, salary slips or Form16

All of the documents mentioned here must be kept handy for the customer support representative so that you can present them when asked. If you can’t provide all or most of these documents, it could result in your loan application getting rejected. 

That being said, every lender has different policies and conditions for a loan for home renovation eligibility. Make sure you go for a loan provider with the most hassle-free loan application process.

  1. Loan EMI and repayment tenure:

Another critical element to keep in mind is your loan repayment tenure. You can repay the loan amount within a maximum term of five years. With that in mind, make sure you plan your loan repayment carefully. You need to repay your loan amount each month in part for a lengthy period, so choose an amount and a tenure that won’t become a financial burden and is consistently repayable.

Loan providers such as Clix Capital provide tools such as a personal loan EMI calculator that help you calculate your total loan expense. You can calculate your total interest payable based on your borrowing and loan tenure. It ensures you can plan your finances effectively before you start the loan application process.

In Conclusion

Some features that define loans for home renovation are high principal amounts, fast loan processing, and convenient loan tenure. Contrary to popular belief, the lowest interest rate is not always the best. You need to look at other elements that will ensure a smooth borrowing journey and repayment tenures, such as customer support, prepayment options, and insurance. 

Every home requires regular painting, restoration, and remodeling maintenance to maintain a high standard of living. Your aim should be to accomplish this without depleting your savings and by paying the lowest interest possible on your borrowings.