Everything You Should Know Before Applying for a Loan to Renovate Your Home

Besides being a roof over the head, a home mirrors the owner’s personality and style. Keeping it in mint condition requires renovation from time to time since comfort and aesthetics matter as much as construction quality and location. However, you need adequate finance to revamp your home. For that purpose, you no longer need to save money; instead, you can opt for a Personal Loan for Home Renovation, commonly known as Home Renovation Loan. 

Are you contemplating a home renovation but need more funds to meet the expenses? That’s when a Home Renovation Loan comes to help. While a home renovation can be expensive due to the increasing material and labor costs, a Home Renovation Loan is extremely helpful for home remodeling, repairs, or renovation with ease. However, before applying for the Home Renovation Loan, here is everything you should know about this funding option.

Know How You Want to Use The Renovation Funds

Whether you’re looking to enhance the value of your home or closing on the house, you can’t wait to make your own. Chances are there’s a renovation or remodeling idea in your mind. You’ll have to consider a lot of things. Some of them can be finding a contractor,  understanding costs, and, most important, how to translate your Pinterest ideas into reality. 

So it doesn’t matter if you’re revamping a space to make it more functional or more beautiful. A home renovation loan can help you pace it up. Whether it is for a whitewash, building more rooms, creating space for yoga or leisure, or a prayer space, utilize your funds with a definite plan to make the most.

Selecting the Best Loan Offering

Although the Home Renovation Loan interest rate matters significantly, several other parameters are crucial to identifying the best loan. While a loan seeker may shortlist the loan offerings based on the interest rate, the search must consider different features and factors. That is the best way to enjoy a favorable and affordable experience overall. 

Several lending institutions like Clix Capital offer Personal Loans for Home Renovation with the best rates and flexible repayment terms. With them, borrowers can get sanctions without the hassle and repay at their convenience by planning their finances better. 

Other points to consider while selecting lending institutions include processing charges, customer service, eligibility conditions, loan approval time, etc. 

Deciding the Loan Amount

Deciding on the loan amount carefully is a crucial step to borrowing wisely. Whether the home requires a bathroom renovation, kitchen remodeling, balcony expansion, or an exterior upgrade, approach an expert and get an estimate to decide the loan amount. Reach out to the vendors and request an estimate for the complete home renovation project. Make a list of everything required for home renovation, assess the disposable savings, and calculate the loan amount needed.

Fulfilling the Eligibility Criteria

After finalizing the loan amount, the next thing to check is the lending institution’s eligibility criterion. Although every NBFC follows different parameters to shortlist applicants, the basic eligibility criteria include the applicant’s age, employment, income, credit score, etc. Therefore, contact the lending institution directly or visit their website to understand their eligibility requirements. The prospective borrowers must apply with a lending institution whose eligibility conditions they can meet. 

Exploring Different Loan Rates

Checking various interest rates is crucial for choosing the best loan plan and saving money. You can use an online Personal Loan Calculator to help you choose the best plan and make an informed decision. The calculator will show the EMI based on your loan amount, interest rate, and repayment tenure. 

A longer repayment tenure reduces the size of EMIs but increases the interest outgo, while a shorter repayment term does the opposite. Whichever the repayment tenure, there is always a chance to obtain the lowest Home Renovation Loan interest rate. Loan seekers with a high credit score and low debt-to-income (DTI) ratio get the best interest rate due to their high repayment capacity and consistent repayment history.

Getting the Documents Ready

After selecting the most suitable Home Renovation Loan plan, keep all the relevant documents ready, including identity, address, income proof, ITR, salary slips, account statements, etc. Try to select a lending institution with a hassle-free documentation process. Technologically-advanced NBFCs like Clix Capital automatically verify the applicant’s details through their KYC information. Go through the list of documents that the NBFC requires and get them ready before applying. Remember, the lending institution might only accept the application if the applicant provides the necessary documents. 

Selecting a Suitable Repayment Tenure

Another crucial thing to consider is a suitable repayment tenure. A Home Renovation Loan is a Personal Loan that borrowers can repay in 12 to 48 months. Failing to pay regular EMIs will attract penalties. Hence, the borrowers must carefully plan the repayment according to their monthly budget. 

A Personal Loan EMI calculator is a smart tool to estimate the monthly installment before finalizing a loan plan. It calculates the EMIs based on the loan amount, interest rate, and repayment term. Users can decrease or increase the monthly loan payments according to their monthly capacity while managing their expenses conveniently. This will also help them choose the repayment tenure.

Maintaining a Decent Credit Score

Applying with a stellar credit score is the best way to get the lowest interest rate on Home Renovation Loans. Essentially, loan seekers should have a credit score of 630 or higher. Follow these tips to improve and increase your credit score if it is currently low:

  • Check the credit report and fix any errors you identify in it
  • Pay off the existing credit and outstanding balances
  • Avoid applying for a new loan for at least six months
  • Reduce the credit utilization ratio by minimizing credit usage
  • Retain old accounts to prolong the credit history 

Although a high credit score does not assure significant benefits, it helps people qualify for better loan terms and offers.

Keeping your expenses under control

Getting the lowest possible Home Renovation Loan interest rate is the key to enjoying an affordable loan experience. However, NBFCs are likelier to offer favorable loan schemes to borrowers with a consistent history of timely payments. Proving that the applicant’s income is not overburdened with existing obligations is the best way to showcase a higher repayment capacity. One can do this by keeping the debt-to-income (DTI) ratio below 30-40%. The applicants must check their finances before applying and get a better deal by proving that they can comfortably pay the EMIs without risk to the lending institution. 

These things will enable you to get a Home Renovation Loan that best suits your budget. The flexible repayment tenure and a low Home Renovation Loan interest rate will help keep EMIs in check. Also, check the lending institution’s terms and conditions before applying to make a well-informed decision and ensure a smooth loan approval process. 

So, what are you waiting for? Get a hassle-free loan of up to ₹ 10 Lakh online for your home renovation from Clix Capital in just a few clicks now!

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