We do lots and lots of research and plan for the home loan before we finalize any Bank/ NBFC to be our lender. The process to borrow a home loan involves checking our credit score, finding the right fit financial institution, EMI calculation, documentation etc which can easily be done with Mudra Homes. After all buying a home is a lifetime decision and a home loan is a lifelong commitment. After buying a home what if we still need funds for its decor or if there is a demand from our children to have a new furniture for their room or if want to renovate our new house with trendy interior? We need funds for it too. While borrowing a home loan we might have not thought of these questions before but can come as a sudden nightmare. But don’t worry this will not turn to be a nightmare for you. We Mudra Homes are here to guide and support you for the same.
We are here to understand your need and help you to avail loans for buying a new house, a renovation or an extended construction on an existing property. The loans that can also be availed for the interior, to buy furniture & fittings for the new house, renovation of old homes or and to construct on an existing property is known as home improvement loans. With time our homes need maintenance or renovation and required to be furnished and maintained for which we need sufficient funds to enjoy our investment. Home improvement loans are designed to provide you a hassle free loan for the renovation of our home. These are short term loans, as compared to home loans, specially designed and highly customized keeping the customer’s needs and specific requirements in mind.
Home improvement loans are available for both salaried and self employed professionals. They can be existing or new customers. The tenor of the loan depends on the customer’s profile and the age of the customer as well as the property. Documentation is similar to all secured loans like a home loan or LAP. Though the interest rates vary from lender to lender but generally it varies from 9.5% to 10.5% per year and the processing fee ranges from 0.5% to 1% of the total loan amount depending on the loan amount, eligibility and most importantly the lender.
Being a new customer to the Bank/ NBFC you might not get the loan of the same amount which you have applied. For the new customers Bank/ NBFC might take risk of 70% to 80% of the required amount. But being an existing customer can help you to avail 100% of the applied amount. You are also benefited with the tax exemption on home loan improvement up to 30,000 per annum. In fact, both owner and the co-owner are benefited with tax deductions on the interest paid on this loan. it is important to keep a not that this exemption also falls into the same category as of home loans interest exemption i.e. 2 Lakhs. The best part of availing this loan is Banks/NBFC’s forbid to impose the prepayment charges on home improvement loans as per the guidelines of RBI. For the existing customers who are regular on their payments Banks/ NBFC’s are likely to process their loan quicker as the required documents are already with the lender.
The property will act as collateral for the loan. In addition to the current financial and property documents an Architect’s certificate will be required to know the details of the work to be carried out. For the salaried profile applicants the loan processing and the disbursement are also faster. In terms of cost, home improvement loans prove to be cheapest and easiest way of credit. Home improvement loans score high over personal loans or LAP due to the lower interest rates and higher tenors.
If you are considering the home improvement loan in current scenario, choose a floating rate over the fixed one as the interest rates are expected to move downwards. Floating rates also facilitate with no prepayment charges. Ideally, the borrower should think of saving instead of borrowing again for the home improvement. Even after savings if the borrower requires more funds and decides to borrow from the Bank/ NBFC, it is important to compare between the financial institutions, the interest rates and the charges that can result in significant savings in future.