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Home Improvement Loan - Interest Rate,Eligibility & Documents

  • 13-Apr-2022

With a home improvement loan, you can upgrade your existing home to a contemporary design and a more comfortable living space. This type of loan helps you to enhance your home in many ways such as tiling, flooring, internal and external paster and painting...etc.  

This loan is similar to home loan, A home loan is provided to purchase a new home whereas a home loan for improvement is offered to renovate or reconstruct the pre-owned home. A good CIBIL score helps the individual to opt for a home improvement loan at an attractive rate of interest. 

Home Improvement Loan Details 

Interest rate  Starting @6.40% onwards 
Loan amount  Up to 90% of total improvement cost 
Loan Tenure Ranges from 12 – 180 months 
Processing fee up to 0.50% loan amount 

Compare the rate of interest and processing fees by Top Banks 

Bank name Min Interest rate (p.a) Processing fee 
Bank of Baroda 6.50% Rs. 8,500 - Rs. 25,000 
HDFC Bank 6.70% Rs. 3,000 - Rs. 5,000 
ICICI Bank  6.70% Up to 0.50% 
Bank of Maharashtra 6.40% Rs. 10,000 
Canara Bank 6.90% Rs. 1,500 - Rs. 10,000 
Bank of India 6.50% 
Aditya Birla Housing Finance  9.00% Up to 1%  
Bandhan Bank 6.40% Up to 1% 
Axis Bank 6.70% Rs. 10,000 
Yes Bank  8.95% Up to 1% 
Union Bank 6.60% 
UCO Bank 6.90% Up to 0.15% 
United Bank  8.00% Up to 60% 
State Bank of India 6.75% 0% - 0.35% 
Indian Overseas Bank 7.05% Up to 0.50% 
LIC Housing Finance 6.90% Rs. 10,000 -Rs. 15,000 
Federal Bank  6.65% Rs. 3,000 - Rs. 7,500 
Tata Capital 6.90% Up to 0.50% 
Kotak Mahindra Bank 6.55% Up to 0.50% 
Punjab National Bank 6.50% Up to 0.35% 
Indiabulls  7.60% Min 0.50% 

Also Read: Compare which bank offers best Interest rates on home loan

Key Features 

  • Easy and hassle-free process of documentation
  • The repayment tenure of the loan ranges up to 180 months
  • No other hidden charges
  • The individual can select a fixed or floating rate of interest for a loan
  • Self-employed and salaried individuals can both apply
  • In India, it is easily available in rural areas
  • This loan can be provided for home renovation such as plastering, tiling, flooring, painting, etc.

Documents required 

For Salaried Individual: 

  • Duly filed application form with 2 passport-sized photographs
  • Aadhaar card and PAN Card
  • Last 1 year bank statement – salary account
  • Last 3 month's salary slip + copy of appointment letter
  • Complete set of Property papers with chain & map + A
  • Loan schedule and sanction letter (If running)
  • A cheque for processing in Favor of the bank
  • Last 3 years form 16, ITR with computation of income (If file)
  • A cheque for processing in Favor of the bank

For Self-Employed:  

  • Duly filed application form with 2 passport-sized photographs
  • Aadhaar card and PAN Card
  • A cheque for processing in Favor of the bank.
  • Business establishment proof such as PAN Card, copy of GST registration, MOA, AOA of company
  • Income proof such as latest 2 income returns
  • Latest 2 years profit & loss statement and balance sheet with schedule
  • At least last 6 months bank statement
  • Complete property documents

Eligibility Criteria for Home Improvement Loan 

Eligibility criteria for home improvement loans depend on various factors such as repayment history, creditworthiness, age of the individual, repayment history, etc. 

  • The age criteria of the borrower range from 18 to 60 years of age.
  • The individual should have a credit score of 750 or above.
  • The borrower can be self-employed or salaried.
  • Work experience should be required for a minimum of 3 years.
  • The applicant must be working for at least 1 year in the same organization.
  • Nationality must be the resident of India.

Factors affecting the eligibility criteria of a home improvement loan 

Shortage of work experience: - Banks will verify the work experience of the individual to determine their ability to pay the monthly EMI and repay the principal amount. 

Low CIBIL Score: - CIBIL Score plays a significant role in verifying the past financial creditworthiness, the CIBIL Score ranging 750 or above, comes in the good category, and if the score ranging 600 or below is a low score it indicates that the borrower does not pay EMI and bills on time. 

Also Read: Top 5 ways to Increase home loan eligibility

Hence, knowing the facts about home improvement loans gives complete knowledge. Financeseva allows you to compare interest rates by several banks and get the best deal for a home improvement loan.  

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