Financing home renovation in India
Revamping your home is a thrilling endeavor, but figuring out how to finance the whole shebang? Not so much. With a plethora of choices out there, it's important to pick the one that fits your financial circumstances like a glove. This article delves into the nitty-gritty of home renovation financing options for Indian homeowners who want to spruce up their space, helping them make savvy decisions without breaking the bank.
Personal savings: The no-interest route
Using personal savings for home renovation is the most hassle-free option as there is no borrowing and hence, no interest to worry about. If you have been saving money specifically for home improvements, this is likely the most cost-effective way to fund your renovations. However, make sure that using these savings doesn't drain your emergency fund or impact other financial goals.
Home renovation loans: Tailored for upgrades
Banks and financial institutions in India provide dedicated home renovation loans at attractive interest rates, usually between 9% and 12%. These loans are specifically tailored for renovation needs and can be used for anything from structural repairs to fittings and finishings. Depending on your credit score and income, you can get a loan of up to ₹25 lakhs or even more.
Top-up home loans: Leverage your existing loan
For individuals with an existing home loan, a top-up loan can be a convenient option to fund renovations. As it's essentially an add-on to the existing home loan, the documentation process is streamlined, and approvals are faster. Although interest rates are marginally higher compared to the original home loan, they are significantly lower than personal loans or credit cards, making it a cost-effective choice.
Gold loans: Quick funds against assets
In India, gold is not only a symbol of wealth and prosperity, it is also a common investment and collateral for loans. If you require immediate funds and possess gold, availing a gold loan can be beneficial. They offer flexible repayment options and attractive interest rates starting from as low as 7%. The loan amount is determined by the prevailing market price of gold.
Credit cards: For smaller renovations
Credit cards, despite their high-interest rates exceeding 18%, can finance smaller renovations or supplement other strategies. They provide cashback and rewards on purchases, which can indirectly lower expenses. Every financing option has its own set of benefits. Assessing your financial strength before selecting or combining them for your home renovation in India is key.
