Top-Up Loans Are Better Than Home Renovation Loans

If you have an existing home loan and need funds for repairs or renovations to your old house, you might consider taking a home renovation loan from banks and financial institutions. However, instead of opting for a home renovation loan, getting a top-up loan can be a better choice for several reasons:

1. Having an existing home loan makes top-up loans favorable:

Home renovation loans are typically for a short duration and smaller amounts. Therefore, if you already have an ongoing home loan, you can easily apply for a top-up loan on it. This way, you can avoid additional paperwork and get the extra amount over your existing home loan. Keep in mind that home loan interest rates range from 8.70% to 9.65%.

2. Floating interest rates available for renovation loans:

Many banks offer renovation loans at floating interest rates. To avail of such loans, factors such as your credit score, the loan amount, your financial profile, and business details are considered.

3. Banks assess the property's value:

If you are taking a new loan for renovation, banks may require various documents like property identification, title deed, ownership proof, and more. Before sanctioning the loan, banks conduct property valuation to determine its market worth. Based on this valuation, you may be eligible for a loan up to a certain percentage of the property's market value.

4. Tax benefits:

You can also avail tax benefits under section 24(b) of the Income Tax Act on the interest paid for a home renovation loan. However, this benefit comes with certain conditions, and you should carefully read the tax-related information.

In summary, when considering financing for home renovations, it's essential to weigh the pros and cons of both home renovation loans and top-up loans. Depending on your specific circumstances and requirements, a top-up loan on your existing home loan may prove to be a more convenient and cost-effective choice. Always consult with your bank or financial advisor for personalized advice regarding your loan options.