Planning to add more rooms to your home? Do you wish to renovate any part of your home? Then, needless to say, you have a big expense coming up. The best way to find the funds that you need to get your home refurbished is to choose a home extension loan. These loans are available to property owners who wish to make changes in it. These loan plans are applicable to properties that have already been constructed. These loans are not only available for you to make any extension or repair in a property that you own but also allow you to furnish your home. This includes the purchase of bathroom fittings, furniture, electronic items and more.
Features and benefits of home improvement loans
You can apply for a Home Loan specifically to make any changes in an existing property that you own. You have various options like Kotak Mahindra Home Loan that are loaded with features and benefits such as:
- The availability of both floating and fixed rates of interests on the home extension loan. This allows you to choose an interest rate that fits your budget. Of course, you cannot choose the rate of interest itself but can decide how it will be calculated.
- A combination of both floating and fixed rates of interest. You can get fixed interest rates in the initial period and then move on to a floating interest rate.
- You can apply for a Home Loan to extend or refurbish your home online as well. This saves you from making trips to the bank and is an extremely convenient option.
- You get repayment tenure of up to 15 years to clear the loan that you have applied for. This tenure depends on the bank that you wish to apply for a loan in.
- As for the amount that you can get as a home extension loan, some banks may cover all the costs related to the renovation. Other banks may cover up to 90% of the expenses. Either way, a large portion of your repair cost is covered.
- There are some loans that allow complete disbursement of the loan amount. In other cases, you will be able to receive the money in parts whenever you require it.
- A free credit card is offered as an added benefit with most of these loan deals.
- Most loans, including the Kotak Mahindra Home Loan will require minimum documentation. This makes the chances of approval high as well.
- You do not have to have a prior loan or relationship with the bank that you choose to apply for your loan in. There are some loyalty benefits that come with working with the same bank for a long period of time. For instance, some banks are willing to cover 100% costs of renovation for existing members. For new members, 80-90% of the expense is covered.
- The rates of interest onthese loans are quite affordable and can range from 8.70% to 10.50% per annum.
Who is eligible for a home improvement loan?
In order to get your home improvement loan approved, you will have to fulfil certain eligibility criteria as mentioned below:
- These loans are available to both salaried individuals and self-employed individuals.
- If you wish to apply for a home improvement loan jointly, you need to make sure that the co-applicant is also a co-owner of the property.
- The minimum age requirement for these loans is usually 21 years. The maximum age limit is the age when you retire. This means that you cannot have a loan tenure that exceeds your retirement age. For most salaried individuals, the cap on maximum age is 65 years.
- It is possible for companies to apply for these loans as well. This is provided that the company has been operational for a minimum term as decided by the lender.
- If any company has been making good profits over the last few years, they automatically become eligible for these loans.
- Every owner of the property must also be a co-applicant for the loan that you are applying for.
Interest rates on home extension loans
With most banks and financing institutions, you will receive two options with respect to the interest that you pay on the loan:
- Fixed rate of interest: In this case, the interest rate applicable to the loan is decided in the beginning. This rate of interest will remain the same for the entire term of the loan. The range of fixed interest rates is between 9% per year to 12.5% per year. The exact interest rate on the loan depends upon the bank that you borrow the loan from. The rate of interest also depends upon your current employment status. In case of salaried individuals, the rate of interest is usually lower in comparison the individuals who are self-employed.
- Floating rate of interest: This interest rate varies as per the prime lending of the bank. This base rate depends upon the rate at which these banks borrow funds from the central bank. The base rate can fluctuate with time. The primary advantage of the floating interest is that it is usually lower than the fixed interest rate. It will also rarely exceed the fixed interest rate. When it does, this is only a temporary hike.
You also have the option of switching from a fixed interest rate to a floating interest rate. You have to pay a small fee towards this.
Documentation required for home improvement loan
You will have to provide the following documents in order to Get Your Home Loan Approved:
- A duly filled application form with photographs.
- Salary slips, bank statements, Income Tax Returns or any other proof of income.
- Original deeds of the property that need to be submitted for verification.
- Address proof including your ration card, passport, license.
- ID proof and age proof including the Aadhaar card, PAN Card, passport etc.
- The necessary documents related to the security that you provide against the loan such as LIC policies.
- Quotation from architect or vendor to confirm the project cost.