Thing to keep in mind while borrowing home renovation loan

Last Updated : July 21, 2016, 9:10 a.m.

When you don’t have enough funds to meet your financial requirement you look for more feasible and reliable options to borrow the funds. Earlier, we used to borrow the money from our friends and relatives as the banks were very rigid and stubborn in point of lending the money. But, in last few years the system has gone through a sea chang and now it has become very simple and common to borrow the loan for meeting your various financial requirements. You can borrow the loan from any of the bank based on your eligibility. Banks offer various types of loan such as home loan, home improvement loan, home construction loan, loan against property, personal loan , education loan and much more.

If you are planning to make some changes in your home and you don’t have enough funds to do the task in that case you can borrow the home loan from any of the bank. You can borrow the home loan or home renovation loan from any of the bank. It is really simple and easy for a salaried or self- employed to borrow the loan, if you have a regular source of income. Although, banks have different norms and regulations to offer the loan. Different banks offer loan for different amount. However, the upper limit of the loan depends upon the profile of the customer. But, when you prepare your mind to apply for home loan you should always search a lot to gather more information. You should compare banks and loan deals on different parameters and terms. Here are some important points, which you keep in mind while borrowing the home renovation loan.

1. If your salary is not sufficient to qualify for the home renovation loan, in that case you can apply for a joint loan by adding a co-borrower which could be your spouse, father/mother or son or unmarried daughter.
2. Always try to find out more about the rate of interest of different banks. The rate of interest of public sector bank is different from private sector banks. In some cases you will be able to get a lower rate of interest in public sector banks. If you will get the difference of even 1%, it is still good option to opt for a public sector bank.
3. Choose a bank which is offering you floating rate of interest as availing the loan for fixed rate of interest for a longer duration is not a good option. You can’t predict the market conditions for next five years or ten years. If the bank reduces the loan rate and you have opted for a fixed rate then you are supposed pay the higher rate of interest for the remaining tenure. So choosing the floating rate of interest for a longer duration is wise idea. But, if you are going to avail the loan for just two or three years you can opt for a fixed rate as well.
4. Always explore the loan options with banks first. If you are not getting the a deal as per your requirements from the banks then only look for other options such as getting loan from private lenders or financial institutions.
5. Check banks on processing fee before availing the loan. If the bank is charging higher processing fee then you should negotiate with the bank to reduce the processing fee amount. Look for banks that are charging minimum processing fee or no processing fee at all.
6. Look for offers and discounts while availing the loan. There are many banks which offer special discounts and schemes from time-to-time. At times, bank offers lower rates for a specific period or nil processing fee at all.
7. Don’t buy add-on products on your loan with the bank. If the bank is asking you to buy a product along with the loan such as life insurance or home loan insurance in that case you can ask the bank to remove that product from the loan offer as the bank will charge you the amount of policy premium from your loan and you are supposed to pay the extra interest for that amount as well.