Are you planning to revamp your home but don't know how to meet the renovation expenses? That's exactly where a home renovation loan can help you. Please be advised that the home renovation could be an expensive affair because of the increasing cost of labour and material. Hence, a home renovation loan can prove to be extremely helpful for you to remodel, update, renovate or make repairs to your home with ease, at affordable rates.
Here are five things that you need to know before applying for a home renovation loan:
1. Deciding the Loan Amount:
You need to calculate the loan amount you require. Reach out to vendors and take an estimate of the cost for the renovation. Make a list of the things you require for the home renovation. Do you need to get your home whitewashed? Are you looking to get the furniture changed or repaired? Take the help of an expert to make the right estimate.
The next step is taking stock of how much of the renovation can be funded from your savings and how much you need to take as a loan.
2. Eligibility Criteria
Once you have decided the loan amount, the primary factor to consider before applying for a home renovation loan is the eligibility criteria. Though some basic criteria include age, income and residence, every lender will have different parameters. Therefore, it would be wise to interact with lending organisations and get a thorough understanding of the eligibility requirements. It is necessary to do your research to find lenders whose eligibility criteria you meet. Next, it would also be advisable to use an online personal loan eligibility calculator to understand the loan amount you may be eligible for.
3. Explore Different Loan Rates
While traditionally home loans had fixed and floating rate of interest, many lenders today offer only the floating rate of interest. As the name signifies, a fixed loan is one whose rate of interest remains constant for the loan tenure. On the other hand, the floating loans are subject to changes as per policies of the regulatory authorities and the lender.
It is now time to compare the interest rate of different financial institutions or NBFCs. While comparing different rates, you should keep in mind two factors- the repayment period and miscellaneous charges.
Whichever type of loan you choose, there's always a scope of obtaining a loan at a lesser interest rate. While negotiating can be initiated, you must also remember the final interest rate will depend on many factors including your credit history and repayment capacity.
4. Get all the Documents Ready
Once you select a home loan for renovation scheme, keep all the relevant details ready such as identity proof, permanent address, sources of income, Income Tax returns, salary slips, etc. It's always advisable to select a lender that provides a hassle-free documentation process. For example, go through the list of documents required for Fullerton India personal loan if you are applying for a loan with FICC.
You should keep all these documents ready and submit them as soon as the customer care representative asks for them or you are required to upload them online. Do remember that your application for the loan may get rejected if you do not provide all the documents required by the lender.
5. Repayment Tenure and EMI of the Loan
Another important thing to remember is the repayment tenure. A home renovation loan is basically a personal loan and can be repaid within a maximum of 5 years. Hence you need to carefully plan for the repayment. You have to repay the loan amount every month, along with interest. It is a good idea to use the an online personal loan EMI calculator to understand what your monthly instalment will be for a given loan amount, rate of interest and tenure. Based on this, you can make an estimate and select a tenure that is feasible for you so that you can repay your monthly EMIs and manage your existing expenses at the same time.
Each home demands maintenance work such as restoration, painting, remodelling and more for proper upkeep. Your house requires your attention and care to keep it from looking shabby and unkempt. Thus, it's essential to refurbish your house at periodic intervals as, over time, monsoon and other factors can affect both the aesthetics and structure of your home to ensure the safety of your family, as well as the resale value of your property.