A home loan provides you with the funds to buy your dream home but what if you already have a home and want to update it as per your requirements? Renovating a hose also needs a chunk of money and sometimes it’s not possible to afford it from your pocket. What if you want to dress your dream house up to make it more beautiful and exactly like you have seen it in your dreams. Or you want to update it with your growing family requirements. Well, opting for a home improvement loan can provide you with funds for this.
What is a Home Improvement Loan?
Home Improvement Loans or HIL is a small portion of a home loan that a house owner takes from lenders to renovate his/her existing house. HIL covers all kinds of renovation measures. It can be construction or interior or paint or anything that involves the improvement of your living space is covered by the HIL.
In India, you will find several financial institutions that provide Home Improvement loans in easy terms. Well, home renovation or improvement doesn’t need a huge amount of money, but even if you need a large amount it can be funded through a home improvement loan for a tenure period as per your preference. However, HIL is no different from Home Loans. The only thing which makes the difference is you are using a home improvement loan to reconstruct or renovate your house, while a Home Loan is used to construct or purchase a new house.
Alternatives to Home Improvement Loan in India
Home improvement loans are nothing scary or special loans that you are not aware of until now. It’s the same as any other loan and can be availed on easy terms. All you need is a good credit history along with a good repayment capacity. There are also some alternatives to home improvement loans which can also provide you funds for the same purpose.
Personal loans are unsecured loans and work in quite a different way as compared to home loans. The loans have no end-use restrictions and hence can be availed for home improvement. Personal loans have a much-simplified process and can be availed at minimal eligibility criteria. Though it is much easier to avail of a personal loan, at the same time, it is a bit expensive than home loans and home improvement loans. While using a personal loan for home improvement some lenders may ask you to offer some of your assets as security. This is a big risk for the owner as you are mortgaging an asset of greater worth for getting the loan.
Top-up loans are also an option for you when it comes to funding your home renovation. Top-up loans are easy to avail of and can be opted on top of any personal loan or home loan. The tenure period for this loan is a maximum of 5 years and the interest charged for it is the same as that of a home loan and personal loan. However, this option remains limited to only those who have a pre-existing home loan or personal loan.
Top 6 Banks for Home Improvement Loan in India
As said above there are several banks and NBFCs providing HILs today. If by any chance your bank is not giving you HIL or you don’t feel comfortable with the charges offered by your bank then here are the top 6 home improvement loan providers in India.
State Bank of India is one of the oldest commercial banks in India, and this is the reason for many people to believe SBI as the most reliable bank. When you avail of a home loan from SBI that means you are getting your money financed through the most trusted public sector bank of India. This bank has special features to offer their customers, with customized products and top customer service. Even the interest rate for SBI home improvement loan is quite reasonable and starts from 6.75% P.a.
Axis Bank is the third-largest private sector Bank in India. Availing a home loan from Axis Bank is always a good idea as the rate of interest and other charges are quite reasonable here. Flexible repayment options and pre closer facilities add-on to its features making Axis bank home improvement loan one of the top-rated loans in the home loan category. With Axis Bank, one can get a loan easily as the loan process is completely hassle-free and smooth. The interest rate charged for an Axis bank home renovation loan is 10.35% P.a.
The interest rate at which HDFC provides home improvement loans is 7.55% which is less than many other reputed banks. Also, the tenure period for this loan ranges from 1 year to 5 years. For Prepayment, it charges No prepayment fees on both full and part prepayments for loans sanctioned to individual borrowers. However, the processing fees is Up to 0.50% of the loan amount or ₹3,000 (whichever is higher)
The HIL limit under ICICI bank is a maximum of ₹ 20 Lac which is lower than the previous two banks. However, the tenure time and the interest rate are the same as that of HDFC. The bank requires no security/collateral for a HIL and promises to disburse the loan in very less time.
Tata Capital is currently topping the chart in Home Improvement Loans providers’ list. It offers you a maximum ₹. 25 Lac of HIL at a 10.99% fixed rate of interest. The tenure of the loan is from 1 year to 6 years. The best part about this loan is there is no processing fee charged by the institution.
IIFL home improvement loans are also a good option for those who want to renovate or extend their existing homes. The interest rate charged against it is quite affordable and starts at 8.45% p.a. The tenure period offered by IIFL for this loan is maximum which is up to 20 years.
Home Improvement loans are the best option when you want to give your home a new look. The loan comes with the same benefits as that of home loans and the best part is you can also avail tax benefits on it.