Buying a new home or renovating your existing house can both be equally exciting. And the best part is that home loans and home renovation loans are available in India, which fund both of these goals. However, things can get a little confusing due to the sheer amount of home-related loans available. So, it’s better to know what every loan has to offer before you apply for one.
If you’re looking to buy a dream house, or transform your existing home, here are the key differences between a home loan and a home renovation loan.
Housing loan vs Housing Renovation Loan
|Criteria||Home Loan||Home Renovation Loan|
|Use||A housing loan is a loan product that is used to fund a property purchase.||Like the name suggests, a home renovation loan is used to fund repair or renovation costs for your home.|
|Loan Amount||The loan amount is usually huge since the funds are used to purchase a property.||The loan amount for a home improvement loan is usually on the lower side since the funds are only used for repairs and renovation|
|Rate of interest||Home loan interest rates charged are more or less equal to that of home renovation loans.||Lenders charge nearly the same rates of interest for a home renovation loan as they do for a housing loan|
|Tenure||The maximum loan tenure for housing loans goes up to 30 years.||The maximum loan tenure for a home improvement loan goes up to 15 years.|
|Disbursal Speed||Since the amount involved is enormous and tenure is long, lenders take a long time to assess your home loan eligibility and repayment capability. Therefore, it may take a long to get your loan disbursed.||Financial institutions quickly disburse home renovation loans due to their relatively low loan amount and shorter tenure.|
|Documentation||As lenders need to judge your repayment capability, they require all the proof available to do so. Hence, housing loans require you to submit a ton of paperwork||Minimal documentation is required to get a home renovation loan|
|Other alternatives||If you don’t have enough funds to buy a house, there aren’t many ways available other than getting a housing loan.||You can also use a personal loan or a housing loan top-up to fund the renovation costs.|
|EMI Amount||Since the loan amount is larger, the monthly installments are on the expensive side||EMIs for home renovation loans are usually on the lower side due to the relatively smaller loan amount|
Be it buying a new home or transforming your existing one, doing a little research before opting for a loan never goes amiss. Also, make sure to go with a lender that not only provides the best home loan interest rates but also offers flexibility, quick disbursals, minimal documentation, and easy-to-meet eligibility criteria.