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A home isn’t just a roof over your head. It is also one of the most important purchases you will ever make. It is the heart of your family. Even if you live in a home for three months on, you can develop a strong emotional attachment. So, your own home is a matter of pride also. As such, you may want to renovate it from time to time. We are not talking about essential maintenance but ways to improve the aesthetics and the comfort your home offers. When you decide to execute your home improvement project, you can take a ‘loan against property’ to meet all the costs.
- Better eligibility: As loan against property is a secured loan, you will be eligible for a higher loan amount. Loan against property eligibility criteria is not very stringent.
- Extend loan amount: Typically, a home improvement project requires a lower amount than the LTV. So, midway during your project, you require more money or extra cash, your lender may be willing to extend the loan with minimum paperwork.
- Lower interest rate: Loan against property interest rate is lower than other interest rates such as a personal loan. Remember that the interest you pay is also a cost, and keeping the interest rate low reduces the overall cost of the project.
- Increase the value of your property: While you may not be considering selling your property currently, a well-maintained home attracts a higher market value. The same holds when you are planning to put the property on rent.
- Essential for maintenance: The very famous saying by writer Oscar Wilde resonates here, a stitch in time, saves nine. So, if you renovate the minor repairs, you may not have to face any major damages.
- Simple application process: The application process is straightforward. If you have all the loan against property documents required in place, the loan would typically be disbursed in under ten days. The loan takes longer to disburse, as the lender will need time to verify the legal ownership of the property you are putting on as rent.
- Tax benefit: Under Section 24, a home improvement loan can earn you a tax benefit in the form of a deduction for interest paid towards the loan repayment. This deduction is capped at ₹30,000. If you also have a home loan, this can be added to the deduction on interest paid on the home loan – up to a total of ₹2 lakh per year.
- No prepayment charges: Typically, loan against property have low to no prepayment charges, allowing you to close the outstanding amount as soon as possible.
- Lower EMI burden: Loan against property allows for a longer tenure, usually, going up to 15 years. It will enable you to have a lower EMI, and effectively invest more of your money.
Given the easier loan against property eligibility criteria, lower interest rate and EMI burden – it is the best way to get your home renovated, refurbished or finance a home improvement project.