Home needs to be upgraded, at a point to enhance the flooring, tiling, plastering, and painting. Financial institutions provide loans to renovate your house with options for tax deduction claims.
You can find out more here about home remodelling loans. There are 2 main kinds of home renovation loans –
- Home equity is used as collateral
- Down payment is necessary
If home equity is not used then you will get small loan with high rates using the down payment option.
Cost estimation from engineer/architect
When you apply from home renovation loan get estimation of cost from licensed professionals. Lender evaluates your application for approval. Estimates from licensed architect, boosts lenders confidence. He feels that the project will get completed on time. However, you will only get 80% of the estimated cost approved, so be prepared to contribute 20% for renovation.
Mandatory technical verification
It is obvious for lenders to feel suspicious about renovation level conducted under home loan projects related to remodeling. An empanelled valuator established the improvement level and offers two to three months technical report. The lender does not visit your home every now and then to check the renovation extent. Loan amount gets paid on restoration level established by the licensed technical company.
Extent of renovation area
Renovation home loans get disapproved, if remodeling is conducted beyond permitted limits. So, make sure that home improvements get done within built-up area.
Tax deduction on home remodeling loans
After existing renovation is concluded certificate gets issued related to loan taken. Homeowners are entitled for tax deduction of Rs. 30,000 annually on interest paid against home remodeling loan. However, if the house is rented then it is not entitled for tax deduction [Section 80C] but interest aspect is eligible under Section 24[B].
Some things to consider before applying for home renovation loan are – if you plan to sell home in near future or if you plan to refinance. Make smart decision and take advice from professionals.
