How to finance Home Renovation?

After staying in the same house for 15 years, most people wait for the right time to repaint the walls? A worry that many face when the monsoon arrives is if their walls will be leaking that year. There may be other small things that may require attention. Appliances that are worn down over time, the odd cracks in the wall that need plastering, loose floor tiling or just a general home renovation.  

These are some of the concerns that people have when it comes to their homes. It is a known fact that there comes a time in an individual’s life when they need to fix the wear and tear of their home. 

Getting your home renovated is no small task. It takes a considerable amount of time and mindspace. More than that, it takes a considerable amount of funds. 

So how to finance your home renovations?

  • Use your savings: Almost everyone is habituated to saving a certain percentage of their income as savings. These savings are generally used in case of an emergency or to fulfill a particular desire. If a home renovation is something you are keen on, you can finance your home renovations by using your savings. However, you will need to keep in mind that once these funds are depleted, you will have to put your dreams on the backburner.


  • Apply for a home improvement loan: Alternatively, you can consider a home renovation loan. Once you have decided on renovating your home, you can finance your home renovations by applying for a home furnishing loan from a bank or an NBFC. Though banks do not particularly disburse home renovation loans, you can always apply for a personal loan through an NBFC like Finnable. Financial institutions are known to disburse home furnishing loans of up to Rs. 10 lakhs, which can help cover home renovation costs.

  • Home equity line of credit: A home equity line of credit is a type of home equity loan. The concept of a home equity loan is similar to an overdraft facility or line of credit facility. So people who ask how to finance home renovations can apply for a home equity line of credit and the funds can be utilised in any way possible. The term is generally decided by the lender and at the end of the term, the borrower must repay them with the affixed interest rate.   

  • Home equity loan: Another way to know, how to finance home renovations is by availing a home equity loan. A loan that is offered based on equity is defined as a home equity loan. While availing a home equity loan, borrowers will need to mortgage their property against the loan amount they wish to avail. It is a type of secured loan. Further, borrowers can use the funds from a home equity loan for any purpose as there is no restriction on the end-use.

  • Credit cards: If you need to know another way, how to finance home renovations, you can use your credit card for minor home renovations. If you are just looking to buy new appliances or buy new material for the house, you can consider using your credit card. However, using your credit card for a much larger project may not be a good idea. To start with, every credit card has a set limit. You may not be able to finance the entire project with just that. Also, your payments need to be done promptly as per the existing billing cycle.
Home Renovation Finance

Things to consider while applying for a Home Renovation Loan

  • Is renovating your home worth it?: Before starting a project like home renovation, ask yourself if it is worth it? Create a checklist and list down the pros and cons. If the pros outweigh the cons, then starting a home renovation project may be worth the time, effort, and money.
  • Affordability/Monthly Budget: Once you decide to renovate your home, you will need funds. Start by getting quotations from contractors who will be doing the work. Based on this, you will know how much money you will need and how much you can borrow. Once you have locked down on the amount, use a loan EMI calculator to determine the EMI you will have to pay monthly. Knowing the EMI will help you understand if you can afford to avail a loan and how it will impact your monthly spending.
  • Type of loan: Loans can be secured as well as unsecured. While availing a secured loan, keep in mind that you will have to pledge an asset against the loan availed. 

    An unsecured loan does not require the borrower to pledge any security and can be a much more viable option for those who need funds quickly. Personal loans are unsecured loans and can be disbursed within a few hours of document verification. You can get the required funds by applying for an interior loan online as well.
  • Documents: To avail a home improvement loan from an NBFC, you will need to furnish your PAN card, Aadhar card, salary slip as income proof, and bank statements to show your monthly salary credit.
  • Interest rate: The interest rate is one of the main components when it comes to interior loans. Before you avail a home renovation loan, check with the lender the interest rate applicable. 

It is imperative to note that secured loans attract lower interest rates as you will be pledging an asset.

Personal loans may have a slightly higher rate as there is no collateral pledged. However, with a good CIBIL score borrowers can negotiate on lowering the interest rates. 

  • Repayment: Repayment against a home furnishing loan will be done via EMIs. Before you avail of an interior loan, use a personal loan EMI calculator to find out how much the EMI will come to. The EMI is a combination of the principal loan amount and the interest amount that is paid through the loan tenure.
  • EMI options: Your home renovation loan will be paid through EMIs. However, borrowers have the option to pay the fixed EMI or even choose to step up their EMI payments when they have extra cash inflow.
  • Hidden fees: Check with your lender if they have any hidden fees associated with your home renovation loan. This can include the processing fee, documentation fees, pre-payment charges, penalties levied against missed payments, etc.

Once you have an idea as to how to finance your home renovation, the next step is to follow the mentioned tips. Before availing a loan, you will need to decide if you want to avail a secured loan or a personal loan. 

While choosing a personal loan, you can use a personal loan app to get all the details concerning the interior loan. Finnable’s personal loan app provides borrowers with all information concerning their home renovation loan. You can also use the personal loan app to apply for an instant loan.    

You can use the funds to buy new furniture, upgrade appliances, fix any wear and tear, and also modify the layout of your existing house. A home renovation loan is a good way to finance your home renovation. It does not create a dent in your pocket while being a more financially feasible option.

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