- Date : 25/05/2022
- Read: 4 mins
Home renovation loans come in handy, especially if you don't have the funds for renovation. If the renovation is important, you should consider home renovation loans.
Owning a house and making it a home are two different things. However, the home you have created needs to be renovated and upgraded from time to time. While not everyone has the budget to do so, one can always apply for a home renovation loan. A home loan helps you buy a property, whereas a home renovation loan allows you to improve the home you already own.
A house renovation loan can help you renovate your property. You may renovate the property as per your choice and modern trends, and the financing can be arranged via a home renovation loan.
It's important to know that the interest paid on a home renovation loan is eligible for tax breaks. Instalments should be made in your name, and receipts should be saved for charge documentation.
For what reason should you opt for a House Renovation Loan?
Some of the benefits of home renovation loans are given below:-
Lower Interest Rates:
A home renovation loan is cheaper as compared to a personal loan as it is secured. Thus, if the final goal is the renovation of the property, you should opt for a home renovation loan. The house is used as a security, and the benefits are passed on to the customer in the form of lower interest rates.
A house renovation loan provides you with a tax advantage on the interest portion; that is, you can benefit from an annual allowance of up to Rs 30,000 (under segment 24) for the interest you pay on these loans. This allowance of Rs 30,000 is under the general limit of Rs 2 lakh available on loan interest instalments of self-involved properties. Overall, interest payments on house remodelling loans meet all requirements for a Rs 2 lakh exemption. Furthermore, the Rs 30,000 limit might save you up to Rs 10,300 in taxes, lowering your total buying cost.
The documentation for a home renovation loan is usually not extensive. You just need to provide proof of income along with the property documents. The eligibility criteria are also relaxed as this is a secured loan.
House renovation loans are handled rapidly as the documentation is insignificant and hassle-free. So, you may start renovating as soon as possible without having to wait for your loan application to be approved.
Tax Deduction Benefits of Home Renovation Loan
Tax advantages are one of the most appealing features of home improvement loans. Taking out a loan for home renovation provides tax advantages that allow you to save money. You can claim up to Rs 30,000 in tax benefits every year on your home improvement loan under Section 24 of the Income Tax Act. However, keep in mind that this deduction of Rs 30,000 falls within the Rs 2 lakh maximum imposed for loan interest payments on self-occupied residences.
This means that the Act permits a total deduction of Rs 2 lakh on house-related loans, which comprises both the purchase of the home and the renovation of the home. You can claim a tax deduction of up to Rs 30,000 on home improvement loans up to Rs 2 lakh. In the grand scheme of things, this tax benefit decreases your borrowing costs.
Features of Home Renovation Loan
The following are some of the most notable features and benefits associated with the Home Improvement Loan.
- Loan amount up to 90% of the property value.
- Longer tenures are available.
- Low processing fees.
- Insignificant or no documentation for existing clients.
- Lower interest rates as compared to personal loans.
- Interest Rates and Processing Fees for Home Renovation Loans
The table below compares the most popular suppliers' interest rates and processing fees for Home Renovation Loans.