Upgrading your home and surroundings can positively impact your mental health. Home renovations can totally change the look and feel of the place, making your stay pleasant.
Home improvement projects can also improve your property’s functionality, comfort, and value. However, these projects can be costly, and most people might not have funds saved to make an upfront payment.
In such cases, taking out a home improvement loan can be a great choice. There are various types of home improvement loans available that you can consider based on your needs and repayment capacity. Before jumping into different home improvement loans, let’s explore why it’s a good idea.
Why taking a home improvement loan is a good idea?
Many people believe that taking a loan will lead them to a debt trap. However, this is far from the truth. Choosing the right loan and opting for a suitable loan amount is the key to avoiding debt traps. You should also use a personal loan EMI calculator before choosing a personal loan for home improvement. Here’s why a home improvement loan can be a great choice.
- Property value appreciation
By making improvements to your home, you can increase its value. If you decide to sell your home in the future, you can profit from the deal. Even if you don’t plan on selling your home, you can enjoy living in a better-looking, more comfortable home.
- Low cost of borrowing
Home improvement loans typically have lower interest rates than other loans, such as personal loans or credit cards. This means that you can save money on interest charges over the life of the loan.
- Flexible repayment options
Many home improvement loans offer flexible repayment options, such as longer repayment periods and the ability to make extra payments without penalty. This can help make your loan payments more manageable and affordable.
- Tax benefits
In some cases, you can deduct the interest you pay on your home improvement loan from your taxes. This can help lower your overall tax burden.
- Energy savings
Home improvements such as installing energy-efficient windows, doors, and appliances can help you save money on your monthly utility bills. This can help offset the cost of your home improvement loan over time.
Different types of home improvement loans
Now that we know why home improvement loans can be a great way to upgrade your adobe let’s learn about different types of home improvement loans.
- Home improvement loans
The first and most obvious on our list is the home improvement loan. These loans are specifically designed for funding the home renovation and repairs. These loans may require you to provide collateral, such as property or investments, to secure the loan. However, it’s crucial to note that the interest rates are relatively lower than other loan products. The borrowed amount can be used for expenses such as painting, flooring, roofing, electrical and plumbing work, etc.
- Personal loans
Since there are no restrictions on a personal loan’s usage, you can easily finance your home improvement projects using this. These loans can be availed of without collateral, and the lender may check your credit score and income to determine the loan amount and interest rate. You can use the funds to pay for renovation, repairs, or upgrades to your home. The best thing about personal loans is the flexible repayment terms.
- Loan against property
Loan Against Property or LAP is a secured loan product that you can avail of by keeping your property as collateral. You can use the borrowed funds for various purposes, including home improvement. This loan generally has lower interest rates than unsecured loans such as personal loans. However, you must be cautious while availing of a loan against property, as defaulting on the loan can lead to the loss of your property.
- Home extension loans
There are times when you feel that the existing space is not enough for a growing family. Home extension loans are designed for people who want to extend their homes or add extra space. These loans may require you to provide collateral, such as property or investments, to secure the loan. You can use the loan amount to pay for expenses related to the construction of the extension, including materials, labor, and other costs.
- Home renovation loans
Home renovation loans are similar to home improvement loans. They can be availed of for various purposes such as painting, flooring, roofing, electrical and plumbing work, and other home renovation projects. These loans are generally offered at lower interest rates than personal loans, and the repayment tenure can vary from a few months to several years.
Final words
Different types of loans are available to help you renovate/repair your house. Comparing the pros and cons of each can help you make the best pick. If you need a higher loan amount, opting for a home improvement/renovation loan or a loan against property is best. However, a personal loan can fulfill a smaller borrowing need to avoid the hassle.