Home Renovation Loan

A home renovation loan is one of the best choices to furnish your home with the dream interiors you have always wanted. You can use the funding for essential repairs, upgrading the structure of your house or expansion. 

Home renovation loans come with various features like affordable interest rates, tax benefits, high Loan-to-Value (LTV) ratio, etc. However, before starting the application process, you must check the eligibility criteria and document requirements. 

You also should compare different options and offers on home improvement loans. This helps ensure that you select the best option and make the most out of your loan. 

Read on to know the features, eligibility criteria, and other details about home renovation loans. 

The home improvement loan tax deduction is applicable when the person uses the loan amount to carry out improvement work on his home. This also includes the loan taken for repair work and renovation works like painting & plumbing works.

As per Section 24 of the Income Tax Act, 1961, tax exemption is applicable on the interest paid on a home improvement loan. However, this tax rebate on home improvement loans has a maximum limit of ₹30,000 per annum. This rebate will be a part of the overall tax benefit of ₹2 Lakhs available under this section for interest paid on home loans.

Do note, that you cannot claim tax deductions on the principal amount paid for a home renovation loan under Section 80C. These deductions are reserved for loans taken to construct or purchase a home.

While the eligibility criteria for a home renovation loan may vary across lenders, here’s a general list of parameters borrowers may have to meet:

• Age: You must be between 18 and 65 years of age

• Employment: You must be either a salaried or self-employed individual

• Citizenship: You can apply if you are an Indian citizen or a Non-Resident Indian (NRI)

• Credit Score: Your credit score must be above 700

• Residence: You can apply for a loan for your permanent or rented residence, where you have stayed for a minimum duration of 12 months before applying

• Income and Employment: You must have a stable source of income

Here are the documents you have to submit with your home renovation loan application:

• Identity Proof: Aadhaar card, PAN card, driver’s license, passport, or voter ID

• Address Proof: Utility bills, Aadhaar card, driver’s license, passport, or voter ID

• Application Form: Duly filled application form with details mentioned on documents, with 3 passport-size photos

• Income Proof for Salaried Individuals: Salary slips/salary certificate of the past 3 months, bank statements of the past 6 months, ITR, and recent Form 16

• Income Proof for Individuals in Self-Employment: Profit/loss statements and balance sheets with schedules of the entity of business (for the past 3 years) validated by a CA, ITR for the past 3 years, and individual bank statements 

Note that NRIs have to provide similar documents, such as a copy of employment contracts, quarterly salary certificates and statements of bank accounts for the past 6 months. 

Choosing a home improvement loan is an important decision. However, the process can be tedious and time-consuming. Here are some points that you must keep in mind while choosing a home renovation loan:

1. Understand Your Needs 

You need to decide the kind of home loan that you want. Make an estimate of all the required changes to your home and then make the budget that would further help you understand the amount you need.

2. Research and Compare Lenders 

Considering all the available options for the loan will help you in getting the best deal. When picking a lender, consider these points:

• Check the associated fees and charges 

• Avoid borrowing more money than you need

• Use a home renovation loan interest rate calculator to plan your budget

• Choose a convenient loan repayment duration

• Check the loan disbursal time to see if you will get the funds when needed 

• Choose a lender that offers proactive customer service

• Ensure you have a good credit score since it helps you get the loan quickly and easily

 3. Understand the Application Process and Other Formalities

Once you decide on the lender, you need to start gathering the required paperwork. You can get in touch with the customer care executive online or offline to understand the formalities. You can seek guidance about the loan tenure, the loan options, etc. 

Once you complete the application, you will have to wait for processing and approval. Upon approval, you will receive the sanctioned loan amount in your bank. You can apply either individually or jointly if you want to apply with co-applicants. 

Getting a home renovation loan can be a smart decision, but you must plan ahead for it. Check recent interest rates, eligibility criteria and documentation to make the borrowing process easy. 

For a convenient home renovation loan application process and other benefits, apply on Bajaj Markets. With a simple digital application, you can get a loan at affordable interest rates and enjoy various other benefits.