5 Points To Keep In Mind When Getting A Home Improvement Loan

The house you live in is more than a place to stay. The house you live in is a reflection of what you are. Living in a beautiful home is an honor for all of us. Remodeling your home is an excellent way to improve your living space. Reno work does not necessarily have to be confined to maintenance purposes. Moreover, you can renovate your house for a more modern look or change its interior. 

Renovating your home can be quite costly if you want to change your flooring, title, color, and even work on the ceilings and give a completely new look to your kitchen and bathroom. You must have a good amount of money to carry out this home improvement project. A variety of banks offer home Improvement Loans to borrowers. These loans lend you money to improve your home while saving you money on taxes. Using these loans to renovate or extend existing old houses or even buy a new home is possible.

Listed below are the 5 Points to keep in mind when getting a home Improvement Loan

Determining the Loan Amount

Calculating the amount of the loan is necessary. Next, you will need to contact vendors to estimate the costs associated with the renovation. Prepare a list of items you need to carry out the renovation. Are you going to need to have the house whitewashed? Do you need to change or fix the furniture? Consult with a professional for the right estimate. The next step will determine how much of the renovation you can fund from your savings and how much you will have to borrow as a home Improvement Loan. 

Eligibility Criteria

After determining the loan amount, the most important consideration is establishing eligibility for the loan. Although there are some basic criteria, including age, income, and residency, every lender will have its requirements. It is, therefore, wise to interact with lending organizations to understand the eligibility requirements. Finding a lender who meets your eligibility criteria requires you to do research. Next, you might want to use an online eligibility calculator to determine the loan amount you may qualify for. You can also apply for a personal loan and use that amount for a home renovation, as nowadays, banks are offering very low personal loan interest rates. 

Examine different loan rates

Home loans traditionally came with a fixed and a floating interest rate, but today many lenders offer only the floating interest rate. The term ‘fixed loan’ describes a loan with a constant interest rate over the loan term. Meanwhile, floating loans can be adjusted according to the policies set by regulators and lenders. Now we will compare interest rates between various financial institutions and NBFCs. Two factors come into play when comparing different rates-the repayment periods and miscellaneous charges. No matter what type of loan you choose, there is always a possibility of obtaining it at a lower interest rate. Negotiations can certainly be initiated, but remember that your final interest rate is dependent on many factors, including your credit history and ability to repay.

Read Also: Top 5 Ways to Avail of a Home Renovation Loan

Prepare all the documents

Once you select a renovation loan scheme, prepare all the necessary details, such as your identity proof, permanent address, income sources, income tax returns, salary slip, etc. It’s always good to choose a lender with a streamlined documentation process. All these documents should be prepared and submitted as soon as the customer service representative requires them or when you are asked to upload them online. If you do not provide the lender with the required documents, your loan application may be denied.

Term and EMI of the Loan

The repayment tenure is another crucial factor to consider. Home improvement loans are personal loans that can be repaid in five years. Therefore, you should plan your repayment carefully. Interest on the loan has to be paid each month, and the principal amount. Using the EMI calculator online will allow you to calculate your monthly installment based on the loan amount, interest rate, and tenor. In this way, you can choose an EMI tenure that is feasible to repay your monthly EMIs and manage your existing expenses simultaneously.

Conclusion

Regular maintenance such as painting, remodeling, and more is required to keep a house in good condition. In addition, you need to pay attention and care to your house so that it doesn’t look shabby and unkempt. It is, therefore, imperative to renovate your house using home Improvement Loans at periodic intervals as, over time, factors such as monsoons and other natural factors can deteriorate both the aesthetics and the structural integrity of your home, thereby posing a danger both to your family and to its resale value.

Additional Read: Top 5 Benefits of Obtaining a Personal Loan