Are you one of those planning to renovate your home but do not know how to meet the expenses linked with renovation? Home renovation can be a costly affair because of the increasing cost of the material and labour. Here’s where a home renovation loan can come in handy and help you update, remodel, renovate, and easily repair your home at an affordable cost. Note that a home renovation loan is a personal loan for home improvement purposes with the same benefits as a personal loan.
Here are top 5 parameters that you must know before you apply for a home renovation loan –
- Determine your loan proceeds
You must compute the loan proceeds you require. Prepare a list of things you need for your home renovation. Do you require getting your home whitewashed? Do you want to get your furniture repaired or changed? For all this, take some assistance from a professional to make the correct estimate.
The next step is to understand how much renovation cost you can fund from your savings and how much you require taking in the form of a renovation loan.
- Eligibility parameter
Once you have determined the loan proceeds, the major parameter you must factor in before you apply for the home renovation loan is your eligibility parameter. While a few basic criteria are age, residence, and income, every lender may have distinct parameters. Thus, it is advisable to use an online personal loan eligibility calculator to better understand the loan proceeds you might be eligible for.
- Explore distinct personal loan interest rates
Personal loan interest rates are of 2 types – floating and fixed interest rates. As the name suggests, in a fixed interest rate, the interest rate stays constant for the entire repayment tenure. In contrast, floating interest rate loans are subject to changes according to the policies of the regulatory authorities.
While comparing distinct rates, you must note 2 major parameters – repayment period and miscellaneous fees. Though opting for a higher repayment period lowers your EMI, your overall interest component increases. Thus, ensure to opt for a repayment tenure as per your budget and not blindly opt for the highest repayment tenure. Also, ensure to factor in miscellaneous fees too, as it unnecessarily enhances your overall loan costs.
You can negotiate with your lender for better interest rates and other terms and condition. However, before you negotiate, ensure to compute the preferred personal loan interest rate as per your repayment capacity. You can easily compute this using an online personal loan EMI calculator.
- Get all your documents ready
Before clicking on the personal loan apply button on the lender’s website for renovation purposes, you must keep handy all your important documents like your permanent address, identity proof, income sources, salary slips, income tax returns, etc. It is always recommended to choose a lender that offers a hassle-free documentation procedure. Note that your loan application may be turned down if you do not submit the documents requested by the lender.
- Compute your loan EMI and repayment tenure
As mentioned above, you must consider your repayment tenure before signing the personal loan deal. Usually, lenders allow a repayment tenure of up to 5 years. Do not blindly go for the highest repayment tenure to avail the lowest EMI as this unnecessarily enhances your overall interest cost. Use an online personal loan EMI calculator available on the lender’s site to understand your preferred monthly instalment and suitable repayment tenure as per your budget and repayment capacity.
Every home needs some maintenance, which includes painting, restoration, remodelling, etc. for proper upkeep. Thus, it is necessary for you to refurbish your home periodically over time. In case you are short on funds, you can arrange the funds through a renovation loan. Given that a home renovation loan is a kind of personal loan, it can be used for any purpose. With the proceeds, you can customise your home according to your requirements without putting any burden on your finances. However, it is advised to avail a realistic loan proceeds that you can repay as per your repayment capacity. Doing so reduces your chances of defaulting on the loan EMI in the future.