How can you use a personal loan to increase your home’s value?

In India owning a home is an avowed desire and people try to acquire at least one home during their lifetime although there may be many who are affluent enough to own more than one home. Besides the emotional quotient of owning a home, it makes economic and investment sense. Homes figure as a great investment avenue because of the acute shortage of homes in the country (As per our sources there is a shortage of over 40 million rural homes and 30 million urban homes).  . In cities and towns, owning real estate in the form of buildings and vacant plots is a popular investment and many affluent people have substantial investments in real estate.

In such a scenario it is important that the owner of a home, enhances the value of the home to serve two main purposes

  • To reside in a modern and contemporary home
  • To enhance the value of the home

Home Improvement

To enhance the value of a home, home owners can renovate their homes and/or extend their homes with additional accommodation. The various aspects of home improvement include

  • Repairs to external façade
  • Repairs to internal accommodation – new floor, wardrobes, kitchen cabinets, new wiring, new water pipes
  • Repainting
  • Addition of a new floor to the existing home
  • Addition of a new bedroom or a study or servant’s quarters
  • Addition of a garage for a vehicle
  • Addition of a terrace garden or a ground level garden

Thus, with the addition of new facilities the home is that much better to live in with most modern amenities and the extension of the space that will enhance the value of the home both financially and emotionally.

Home Improvement Loan

For many home buyers, it is very difficult to finance a home and they often take a home loan to fund the home purchase or construction. The loan takes a heavy toll on the finances and they find it difficult to make both ends meet. Further, the home loan repayment goes on for a longtime in some case up to 30 years.

It is difficult for home owners to upgrade their homes without additional financing as they need lump sum amounts to fund additional construction or amenities including sprucing up. Thankfully, there are financial institutions that look at home improvement requirements of home owners. They extend home improvement loans under the personal loan umbrella. Lenders also extend home improvement loans to borrowers even if they don’t have a home loan.   

The advantage of a personal loan lies in its ease and simplicity with which people can avail a personal loan. If homeowners already have a loan with funders such as Tata Capital, then it is easier to avail a personal loan from such lenders.

Features of Home Improvement Loan

Home owners can use personal loans to improve the value of their homes because they contain features such as

  • No collateral required
  • Loan amount up to Rs 25 lakh
  • Interest rate linked to repayment history and credit score of the borrower
  • If the borrower has a home loan from the same lender, the interest rate could come down further as there is the security of the property under the home loan resting with the lender
  • Repayment tenure can extend to 15 years

With many lenders, availing home improvement loan is easy and simple and quick if the borrower has a good history with the lender especially if the history is in respect of the home loan.

Tax Benefits

Besides the advantage of improving the value of their homes with a home improvement loan, borrowers can also avail tax benefits under various sections of the Income-tax Act Thus it is very beneficial for the borrowers to improve the value of their homes by taking a home improvement loan from lenders such as Tata Capital.

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