Buying a new home is a big moment for anyone. But after living in a new home for a while, a new home can seem a little boring. You can always do it up with a little renovations, but to make any changes you need to spend money and that can be difficult when you’re already paying off home loans. To make it easy for you to keep your home as good as new, banks have introduced home renovation loans.
A home renovation loan can be taken as a top-up to your house loans or can be taken by itself. When you take a home renovation loan as an add-on, the interest is added to your home loan interest rates. This way you don’t need to pay separate EMIs for two loans. This loan is great home finance tool, it can help you keep your home looking as good as new.
If you wish to avail a top-up loan for your home renovations here’s everything you have to know about it.
1. Eligibility: Top-up loans can be availed only by someone who has an existing house loan. There are other preconditions too that you need to fulfill before you become eligible for such a loan. Here are some of the criteria that are taken into consideration.
• Minimum period: You need to have started repayment of your housing loan and paid interest for a certain period before you are eligible for your home loan. This period may differ from bank to bank.
• LTV limit: Loan-to-value (LTV) is the amount you’re allowed to borrow on your existing housing loan. The LTV ratio is fixed at 80-85% of the present value of your property.
• Tenure: The tenure of top-up loan runs concurrently with that of your home loan. So if you have 10 years remaining for your home loan repayment, your top-up loan tenure cannot exceed the remaining term.
2. Benefits: The first and foremost benefit of a top-up loan for home renovations is that you don’t need to manage multiple loans when you get a top-up. The top-up amount is simply added to your existing loan amount and the top-up loan interest rates are also paid through a single EMI. There are no restrictions on the usage of this amount. You can use it for whatever you want, however you want.
3. Other uses: If after a few years of paying interest on you house loan you have a big expense coming that is related to your business or family, you can opt for a top-up home loan, instead of going for a personal loan.
