How to Finance your Home Renovation?
Have you just bought a new home or an apartment put on resale? Congrats! But hold on! Do you have enough money to revamp the place? It would be unfortunate if you bought a new house and were left crunched for funds to turn it into a beautiful home, wouldn’t it? A home renovation loan is a solution to this problem. This article will walk you through options to fund your home remodelling work. Here are several basic methods to secure funding for remodelling your home.
What is a Home Renovation Loan?
Banks provide home renovation loans to people who need financial assistance to restore or repair their houses. You can use the funds to improve the decor of your house, such as redoing the flooring, tiling, plastering, painting, and also renovating areas such as the kitchen, living room, and bedroom. The paperwork process for a home renovation loan is simple and the interest rates are similar to housing loan rates.
A home renovation loan is a good option to arrange funds for house repair. Yet, many people borrow credit lines for this reason, which might be an unfair or time consuming process. Even though a personal loan may be obtained in a week or two, the payout of a home repair loan may take longer. If you already have a house loan, your chances of getting a home renovation loan are better. You may also claim tax perks after taking out a home repair loan. However, home renovation loan interest rates at various banks might range from 10.25% to 11.00%. So seek choices that are both cost-effective and provide the most value.
Ways to Finance a Home Renovation
While a home renovation loan is a way to finance the renovation, let’s also take a look at some other options. Here are the top ways to finance your home renovation:
Using One’s Savings
If you have been planning to renovate your home for a while, there are chances that you may have considered setting aside some money regularly for achieving this goal.
If you have enough money saved to support the repair work without risking your investment objectives, utilising your savings for a house repair is a smart choice. One way to plan this is to set aside some money as a fixed deposit (FD).
Getting a Personal Loan
Some lenders and banks offer personal loans that can be used to renovate your house.
You can get a personal loan based on your monthly income. It is an unsecured loan and you can use the personal loan amount as you see fit. However, the loan duration and interest rate may vary from bank to bank. Also, some banks charge a fee for pre-paying a loan. It is important to carefully read the terms and conditions when availing such a personal loan.
Taking out a Construction Loan
If you are going to build yoru dream home from scratch, a construction loan can be of assistance. A construction loan enables you to draw cash from the loan when your bills come, whether for a minor expansion or a total knock-down rebuild. This saves you money since you only pay the interest on the progress fees paid until the loan is completely drawn.
Property loan
You may get a loan against your house to do house repairs. The majority of banks and credit unions provide this loan. Banks will lend up to 80% of the property’s worth. The interest rate on loan against property is lower than that on a personal loan. You can choose six months or more to pay back the loan based on your needs. This loan also provides tax savings.
Using a Credit Card
You can use your credit card to purchase materials for your home repair projects. Based on how much your credit limit is, you can also withdraw money to use for your home renovation. You can split your whole spend into easy EMIs and return it in a year or less based on your financial plans. Using a credit card enables yourepayturn the loan in advance without incurring any charges. However, this does not provide you with any tax benefits.
Property Extension Loan
Banks and other financial institutions provide property extension loans. This loan may be used for repair and property expansion. The interest rate may differ from one bank to the next. You may choose a tenure that meets your needs. This loan is also tax deductible.
Use of Equity in the House
If you are an eligible customer of yoru bank, you can use the equity in the house to top up (raise) or redraw the house renovation loan.
Top-Up Loan
Topping up your house loan may be a viable option if you’re planning repairs, merging debts, or just needing more money. You can obtain more on your current home loan without taking out a new loan. You may get help with a cheaper interest rate than other loans, such as a personal loan.
Mortgage Loan
Banks lend you money by taking your gold, jewels, and assets into debt. This is another way to get funds for your repair job. A mortgage loan, however, has a higher interest rate. You must pay 9.50% and 11.25% interest on your house and top-up loans. Yet, you will be charged a higher interest rate for this loan.
Conclusion
Are you familiar with the saying, “Home is where the heart is”? This place, called home, is where a person’s life is rooted. Therefore, it is natural that one may want to spend on renovating it from time to time. A planned home renovation helps you revamp your house with minimum financial burden. Using a home renovation loan or other methods is a great way of funding the repair and redesign of your house. For more such interesting articles and financial products, visit Piramal Finance website.