How to Apply a Personal Loan for Home Renovation?

May 29, 2020

Making changes to your home once in a while is quite common. Be it improving your bedroom style, putting in some contemporary woodwork, or introducing a completely eclectic décor theme throughout the house, home renovation is part of every individual household.

In the Indian context, you see a lot of renovations happening around important family functions, festivals or celebrations. Having said that, the functions and celebrations have a cost implication of their own. Hence, making significant improvements to your home within a restricted budget can greatly impact the overall quality and end finish.

This is possibly the reason why personal loans for home improvement are rapidly gaining popularity.

What is a Home Improvement Loan?

A home renovation loan or a home improvement loan is an unsecured personal loan which means that the lending institution does not require you to put a security against the approved loan. Since this is not a mortgage or a loan against property, you would not be required to provide the financial institution with the deeds of your home.

Generally, a personal loan for home renovation can be repaid back in easy and convenient monthly instalments or EMIs. The tenure can range anywhere between 12 to 60 months. The EMI amount will be determined by the loan amount as well as the lender’s processing fees and interest rate..

If the borrower pays back the entire loan within the designated repayment period, then there are no additional fees of penalties levied. At Fullerton India, we also offer our customers the option of foreclosure prior to the end of the loan tenure. Depending on the actual tenure and the point of foreclosure, you may or may not be charged a foreclosure fee. Please visit our personal loan interest rates page to know more.

Your eligibility for the loan largely depends a lot on your credit history. This is linked to your ability to repay the loan and also your annual income for salaried individuals and company turnover for business people.

Why Choose a Home Improvement Loan?

Frankly, there are several ways to finance your home renovation project. What is hard to decide on the mode of finance. A lot of times credit cards work well for those who wish to carry out small time renovations. However, credit cards lack the stability that is offered by a personal loan for home improvement.

Must Read: How to Get Tax Benefits on Personal Loan

With fixed rates of interest, a home renovation loan offers a lower APR in comparison to a credit card. It also means that there will be no fluctuations in the EMI amount during the term of repayment. Credit card loans, on the other hand, come with very high rates of interest and if you are not able to pay back the spent amount in the given billing cycle, you just end up accruing more debt.

How to Apply for a Loan?

Before you proceed with your personal loan requirements, make sure that you check your eligibility first. With a good CIBIL score, the probability of your home improvement loan getting improvement is higher.

Follow these steps when you make your application.

1. Fill Out the Application Form:

You need to start the process by filling out the application form first. Ensure that the personal, employment and financial details provided are accurate to the best of your knowledge. You may also need to fill in your PAN and Aadhar number to proceed to the next step.

2. Select the Loan Amount:

At this stage, enter the loan amount that you need along with the tenure of repayment that is suitable for payback. Use the personal loan EMI calculator to understand the amount and number of monthly instalments that you will need to pay back.

3. Submit Required Documents:

Your identity along with your financial status will need to be verified by the lending institution before they approve or reject your home renovation loan application. They will also ascertain if you meet the criteria for eligibility. Here are some of the  documents that you may be requested to submit.

  • KYC documents (ID and address proofs)
  • Salary slips (for salaried customers) or audited income and financial statements (for self employed customers)
  • Bank statements for the last 3 months of your account
  • Employee ID (for salaried customers) or business proof (for self employed customers)

4. Receive Your Loan Amount:

Generally,  lending institutions take anywhere between 24 hours to a few days to decide on your loan application post receipt of all relevant documents. If the loan is approved, the funds are typically disbursed within 24 hours.

Benefits of a Personal Loan for Home Renovation

The personal loan for home renovation comes with benefits galore. Here is a glimpse of how it benefits you to get one.

1. You Can Avail A Collateral-free Loan:

At Fullerton India, we offer collateral free personal loan for home renovation of upto 90% of the value. The maximum amount you can get is Rs. 25 lakhs. Depending on your requirement, your eligibility and the company’s policy at the time of loan application, you will be advised on the maximum loan amount you can avail.

Do remember to check your monthly instalment commitments with the help of our free personal loan EMI calculator online before making a formal application.

2. Simple Application Process:

Most home improvement loans can be applied online which generally takes not more than 15 minutes. With the facility for online verification of the uploaded documents, the application may be approved sometimes in less than 5 minutes. You can have the funds disbursed in 24 hours, thus, meeting all your personal loan requirements.

3. You Can Take Care of Unexpected Expenses:  

It is difficult to come up with the exact amount that you will need to renovate your home. At best, you can get an estimate from your contractor, electrician and plumber. In such a situation you should be prepared to meet unexpected expenditures whilst the process of home improvement is in progress.

A personal loan for home improvement can come in handy here as the loan amount should be able to combat any such unplanned expenses.

4. You Can Track Your Loan Details Online:

Most of the information for home renovation personal loans can be monitored and accessible online. You will be assigned a set of unique login details through which you can regularly track your loan account.

Must Read: Types of Personal Loans in India

Why You Should Take A Personal Loan for Home Renovation?

Major home renovations come at a high price tag. Therefore, a personal loan for home renovation best fulfils your financial needs to carry out all that is required in terms of repair, maintenance and improvement work. Since the money will be directly disbursed to your account, you can also use the personal loan to make cash payments in the case of petty expenses, and so on.

Let’s take a look at how taking out this loan and renovating your home adds value to your property.

1. Renovating Your Home Adds to The Property Value:

Whether you wish to hold on to your property or sell it off at some point in time, renovating it regularly adds to its overall sale valuation. By updating it both on the inside and outside, you have a greater possibility of attracting a good sale offer, especially with rising real estate prices.

2. Home Renovation Is Essential for Maintenance:

Every home needs to be maintained well regardless of its status of being leased out or self-occupied. Undertaking this activity regularly ensures that you do not have to indulge in expensive repairs in the long term.  

In Conclusion

You may be averse to debt and possibly consider saving before you undertake a major job such as a home renovation project. But that can take years to accumulate the amount of savings that can get you started.

Taking into account all the financing options at your disposal, a personal loan for home improvement ensures that you can embark on your renovation journey at the time convenient for you, with easy repayments and staying well within your means.

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