Why Should you Opt for a Home Improvement Loan?

A home is a dream for many. However, it doesn't take long for a dream home to turn into shambles if not properly cared for. Therefore, it is of paramount importance to take care of your home through regular maintenance, repair work or renovation every few years. A little remodelling, development or renovations have the potential to completely transform your home into a beautiful house.This is an investment that goes a long way in adding to the resale value of your home. Moreover, it adds more beauty to the house and ensures your maintenance expenses are kept under a check. Leaky faucets to dripping walls; improving or renovating your home after a few years of construction helps to add back some of its lost charm.But, how to achieve this? This is where the home improvement loan comes in for your help.

It is similar to a home loan. The only difference is in the way you can use the loan amount. With a home loan, you can buy a new home, flat or property. However, if you already own a home and want to repair or renovate it, you can consider taking a home improvement or renovation loan. The rate of interest is similar in both cases.

1. Low-interest Loan Option: Being a secured loan, a loan for home improvement is available at very low-interest rates. In fact, these loans attract one of the lowest rates of interest compared to other options such as a personal loan.
2. Tax benefits: Under section 24 of the income tax act,1961, a house owner is eligible to claim an income tax deduction of up to Rs 30,000 on the interest of the loan taken for home improvement. This is part of the Rs 2,00,000 tax deduction benefit borrowers can get on interest payment towards home loans. Thus, if your home loan interest outgo is Rs 1,50,000 and the interest outgo on the home renovation loan is Rs 30,000, you can claim a total tax deduction of Rs 1,80,000 and reduce your tax burden.
3. Flexibility to Use: Home improvement is a blanket term that can easily cover a large number of activities undertaken towards improving or renovating your home. You can consider extending your houses, such as adding a floor (make sure that you have an approved plan from a government-authorized civil engineer), painting, installing the tiles, waterproofing the walls and roof upgrading your kitchen and so on.
4. Longer tenure, Lower EMI: Unlike many other loan options, you can take this loan for up to 10 years. Due to the longer tenure, borrowers can enjoy a lower EMI and manage their finances better.
5. Increase Your Rental Income: A renovated and developed property can increase the rent prospects. It helps to increase your passive income.
6. Improved Credit Scores: This type of loan is a secured loan given to you by mortgaging your own property. Hence, it improves your credit ratings over time, and you can get unsecured loans such as personal loans relatively easily in future.
7. Lesser paperwork in future: If you need another loan in future, you will have to go through lesser paperwork as you would have established your credibility with the lender.
8. High Loan to Value Ratio: Being a completely secured loan, borrowers can enjoy a higher loan to value ratio, which can go up to 90% of the property's value.
9. Easy Prepayment Policy: Some lenders offer zero-prepayment penalty loans. However, this is only offered on floating-rate loans.
10. Easy to Process: This type of loan requires minimal documentation and can be processed very quickly depending on your relationship with the lender and your credit profile.

A home improvement loan helps you budget for the much needed regular maintenance and renovation that your house needs from time to time. Choose a reliable lender that offers attractive interest rates on such loans and get started with your home improvement and renovation project today.

The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.