When you think about home improvement you have various things that you can do within your home. Nowadays, people hire experts of the field to renovate their homes and to give their home a brand new look. So, if you are thinking that you can renovate your home within a small budget, you should think again and calculate all the things before you start this big project. If you are planning to give your home a total makeover, in that case, you should always calculate all the costs related to the different work you are going to carry out in your home. Once you calculate all the budget and know the expected cost related to the work of home improvement. The next questions that you should be ready to face how are you going to arrange the funds? Do you have sufficient funds to carry out the work or will you think about different options? If you don't have enough funds to carry out the work in that case you should think for all different options available to arrange the funds and calculate the extra cost linked with that funding option. Here are some options, you can think upon to arrange the funds to carry out the home improvement work. But, before finalising any option calculate the positive and negatives of that particular option.
- Home improvement loan: This is one of the most suitable and pocket friendly option to arrange funds for your home improvement work. You can avail a loan from any of the bank or NBFCs. However, the term and conditions and rate of interest of loan may vary from bank to bank. The maximum tenure may also vary from bank to bank. Generally, most of the banks provide home improvement loan for 10 years.
- Credit card payments: If your home improvement work will not require much spending and you are going to make some regular changes and improvement work, in that case you can also make payment through credit card. You can buy raw material and other stuff by making credit card payments. You can use your credit card to the upper limit of your card to make payments.
- Personal loan: Personal loan is another good option to make payment for home improvement work. You can borrow a personal loan from any of the bank or financial institution for home improvement work. The bank will lend you the money based on your repayment capacity and monthly income. However, in personal loan you can't avail a higher loan unless or untill your monthly income is really high as compared to loan against property where the maximum limit is Rs. 10 crore and more in different banks. Whereas, in personal loan the maximum loan limit is Rs. 30 lakhs that a bank will offer to you in a very ideal situation for maximum 6 years.
- Making cash payments: This is one of the most common one. You can use your available cash from your saving account to make payments for your home improvement work. Here, you have two drawback. First, you can spend upto the available limit of your saving account and second, you will lose your contingency fund for sake of home renovation.
- Using your Fixed Deposits: If you have any fixed deposit account, which is going to mature soon you can use that fund for home improvement work. Even you can break your FD before the maturity if you don't want to borrow the loan. There is another facility available with your fixed deposit that you can borrow loan against fixed deposit if in case you don't want to miss the interest you are earning on fixed deposits. You can avail maximum of upto 90% of amount against your fixed deposit as loan. So, fixed deposit is a good option to avail for home improvement.
- Borrowing loan against property: You can always borrow a loan against property for renovation work. You can give your property as collateral against the loan. Here, in loan against property you will be able to get the lower rate of interest as compared to other loans along with higher tenure of upto 15 years. This option offers you various benefits as higher loan eligibility, lower rate of interest along with longer tenure. But, it too has a drawback that in case you fail to repay the loan, the bank has all the rights to sell or takeover your property to recover their amount. In this loan your hard-earned property is at risk.
- Availing a top-up loan on home loan: If you have already availed a home loan, so you can anytime avail a top-up loan against your existing home loan. You can borrow the loan amount based on your eligibility and the repayment period maximum 20 years or till the tenure of your existing home loan.
- Loan against life insurance policy: This is one of the most uncommon mode of arranging funds for your home improvement work. You can take a loan against your life insurance from the same insurance company or from any other bank. The rate of interest of this loan is a bit lower as compared to personal loan. The loan amount also depends upon the sum assured of your life insurance policy.