Home improvement loans or home renovation loans are personal loans provided by online lenders, credit unions, or banks. While these function like any other type of loan, you can use the available funds only for renovation expenses and related costs.
Home renovation loans or personal loans for home renovations are ideal for certain renovations or projects. Still, it is important to analyze potential risks in the proces sof applying for this type of loan. Moreover, getting approval for this type of loan will require that you maintain a good credit score and a steady source of income.
How to Get a Personal Loan for Your Home Renovation
Your home remodeling project can include modifying your kitchen, doing a bathroom remodel, or including an extension. Whatever the project, you can customize your available space with the help of a home renovation project.
There is no denying the fact that these renovations are quite expensive. In this case, applying for a personal loan for home renovations is a great way to finance the project. You can ensure a paperless loan online with the help of reliable online lenders. In this way, you can ensure proper savings and renovate your home the way you like it.
Some easy ways to apply for a paperless loan online for your home renovation project are:
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Understand Your Budget for the Renovation Project
As you think of applying for a personal loan for home renovations, it is imperative to be aware of your available budget and how much you are willing to spend on the renovation project. With an estimate of the total costs, you will be able to decide on the exact amount to borrow without under-borrowing or over-borrowing.
Some additional tips are:
- Obtain quotes from different lenders and estimate costs for smaller projects
- Prepare a list of all the renovations you would like to make in the house
- Consider additional expenses like electrical upgrades, waterproofing, structural changes, or plumbing work.
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Go Through Your Credit Report
In India, loan providers look into the credit report as the primary eligibility criterion when it comes to approving personal loans. The eligibility criteria can vary between banks and lending institutions, but some common aspects to consider are:
- Age: Should be between 21 and 65 years.
- Employment: Self-employed or salaried individuals with a stable source of income
- Credit Score: A credit score of above 750 is preferred by lenders
- Income: A minimum monthly income of INR 15k and INR 25k. This amount will vary from one loan provider to another.
Several reliable online lenders or platforms allow you to check your credit report for free. With the help of a good credit score, you can get better interest rates and loan terms.
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Compare Different Loan Providers
There are several lenders and financial institutions available out there that offer the ease of applying for personal loans online. You can use the funds provided by them for renovating your space beautifully. However, you should compare them properly to choose the best one. Here are some factors to consider:
- Prepayment Charges: Some lenders or financial institutions charge a fee for early loan repayment.
- Interest Rates: While making the comparison, search for competitive rates. Typically, this rate can vary between 10 percent and 24 percent per annum.
- Loan Amount: Make sure that the lending institution is able to provide the loan amount you require.
- Processing Fees: The processing fees of lenders can vary between 0.5 percent and 2.5 percent of the total loan amount.
- Loan Tenure: Most lenders and banks offer the loan tenure of 12-60 months. It would depend on certain factors like the loan amount borrowed.
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Collect All Important Documents
If you want the personal loan application process to be simple, you need to collect and submit all important documents. Some of these documents are:
- Bank statements from the last six months
- Recent passport-sized photographs
- Duly-filled application form for the personal loan.
- Important KYC documents, including Aadhar Card, PAN Card, and passport
- Proof of income, including your salary slip, Form 16, or IT returns in case a self-employed is applying for the loan
- Proof of home ownership, including utility bills
- Proof of employment, including employee ID, appointment letter, and so on.
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Submit the Personal Loan Application
After selecting the right loan provider and submitting all important documents, it is now time to submit the completed personal loan application form. With some lenders or banks, you get access to different lending platforms or options, including:
- In-person: Visit the nearest branch or lending institution
- Online: You can apply through the lender’s website or mobile app
- Through a direct sales associate or a loan agent
It is advised to complete the personal loan application form properly. At the same time, it is also important to match all relevant documents before submitting them. Double-check everything to minimize delays and a risk of rejection.
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Understand the Verification Process
Once you have submitted your application for a personal loan for home renovations, the loan provider will start the verification process. It includes the following:
- Income verification: The lender or the institution might contact your employer along with the submitted information.
- Credit Check: The lender will assess your credit history and your credit score.
- Document Verification: The lending institution will go through all your submitted documents to understand your financial condition.
- KYC Verification: Lenders or institutions will conduct an in-depth VKYC or CKYC check to verify your identity along with the submitted information.
- In-person Check: The NBFC or the bank might send over a representative to your workplace or home to ensure final verification.
Conclusion
You can apply for a personal loan for your home renovation if you wish to access funds quickly. With this type of loan, you get ample flexibility and the ease of living in your space comfortably without compromising your savings. Still, you need to look into certain factors before applying for the loan.
