Funding options for home improvement

Owning a house is a dream come true for many. Most of the home owners these days prefer to enhance their interiors with modern design and personalize it using luxurious elements. Budget plays a very important role here, especially while planning the interiors of a home. To reduce the financial hassles of a consumer, banks offer several loan options.

Remodeling of homes is an expensive affair and this fact is not hidden from owners. To avert a major financial crisis, it is imperative to prepare a budget and opt for the right funding option accordingly. Similarly, as a consumer you need to ensure a good credit score for banks to grant you a loan. Arrivae takes a look at the funding options available for home improvement.

1. Home loan top-up: This is a cost-effective funding option for home owners that is matched to home loan tenors and is mostly availed at home loan rates. Top-up home loans are sanctioned by existing housing finance companies if the customer is eligible for additional top-up and the home value falls within the LTV (loan-to-value) threshold. Following are the criterion for the top up scheme:

  • Lenders: All housing finance companies including HDFC, Indiabulls, PNB HFL, SBI and Axis Bank

  • Tenor: 10-30 years

  • Eligibility: Based on LTV and income levels

  • Security: Existing house mortgaged for the home loan

  • Rate of Interest: 8.3{5e869c1d949a0ea2682ed2eec117389d37372fb0de21f482c32016940f165c91} onwards

  • EMI: Rs. 860 per 1 lac for a 20-year loan

2. Consumer loan/personal loan: These are unsecured loans given by banks/NBFCs after taking the income eligibility and credit profile of the customer into consideration. Typically, the average rate of interest for personal loan could be 10{5e869c1d949a0ea2682ed2eec117389d37372fb0de21f482c32016940f165c91}-15{5e869c1d949a0ea2682ed2eec117389d37372fb0de21f482c32016940f165c91} depending on the customer’s credit profile. This loan can be availed by non home loan customers for home improvement spends. The criterion for this loan is as follows:

  • Lenders: Bajaj Finance, Tata Capital, Capital First and HDFC Bank

  • Tenor: 12 – 60 months

  • Eligibility: Depends on income level and credit profile

  • Security: Typically unsecured

  • Rate of interest: 10{5e869c1d949a0ea2682ed2eec117389d37372fb0de21f482c32016940f165c91}-15{5e869c1d949a0ea2682ed2eec117389d37372fb0de21f482c32016940f165c91}

  • EMI: Rs. 3300 per 1 lac for a 36-month loan

3. Home improvement loans: Housing Finance Companies also offer Home Improvement loans to customers to do the furniture in their house or do high ticket renovations. Let’s take a look at the criterion below:

  • Lenders: Major banks and PNB HFL

  • Tenor: 1 – 15 years

  • Eligibility: Based on LTV and income levels

  • Security: Mortgage of the property

  • Rate of interest: 8.3{5e869c1d949a0ea2682ed2eec117389d37372fb0de21f482c32016940f165c91} onwards

  • EMI: Rs. 975 per 1 lac for a 15-year loan

For a 5 lac home interiors, home improvement EMI will be Rs. 4,292.

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Edited by Relin Hedly

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