This article breaks down the concept of home improvement loans, their benefit, and how to avail of them.
Are you thinking of remodelling your home this year, but are wary of diverting all your savings for the project? You could consider taking a home improvement loan.
What is a home improvement loan?
As the name suggests, it is a home loan product designed to help the borrower remodel or refurbish their property. It provides the requisite funds to overhaul/upgrade:
- Roofing, ceiling leakage and tiling
- Internal and external repairs (civil/plastering, painting)
- Plumbing services
- Electrical services
- Wood work and false ceiling, etc.
These repairs are quite expensive. Considering the scope of the project, you might be tempted to do the remodel in parts so that you can make the necessary funds available at periodic intervals (from your salary or business income). However, this may cause project delays since the work progresses very slowly.
How home improvement loans help
Like mentioned above, the costs of repairing and refurbishing your home are quite considerable. If you have a good credit history and loan repayment capability, then you can easily get the house improvement loan and carry out the intended redesign without further delay.
- Taking a home improvement loan can help you complete all or most of the proposed upgradation in one go, instead of deferring parts of it for later.
- Also, the loan saves your reserve funds (money in savings bank accounts, investments, other income sources, etc.) from being diverted into expensive repairs and refurbishing.
How to apply for the home improvement loan
* Hire an interior designer/architect to draw plans and estimates. You will need to submit plans for the proposed remodel, made by an architect or interior designer. The proposal must also include a cost analysis and estimate as per current market costs for labour, material and transport. Present the proposal to the lender.
* Find out the LTV. The home improvement loan will have an LTV of about 80%. The remaining 20% must come from your reserve funds.
* Let the lender check your property. The lender now physically verifies the property against the submitted plans and drawings. The cost estimates are also compared with the on-site conditions. After this, the evaluator submits their report to the lender, and the process moves forward.
* File the paperwork correctly. The housing finance company will have a list of home improvement loan documents to be submitted with the application. Fill out the application with the latest information, and upload personal ID and residence proofs, income details, details about the proposed remodel, and cost estimates. Do check your home improvement loan eligibility before you apply.* Apply online and get the loan disbursal. By now, the site visit report has already reached the lender. You have also got the application ready. Leading housing finance agencies allow the application to be uploaded online along with the supporting documents. Once the loan request is approved, you are asked to collect the disbursal cheque. The lender may even electronically transfer the money to your account.