Having a loan on your Home
Home Improvement
Having bought a property, sometimes the bigger task is to make it livable by sprucing it up to a level that makes living in it enjoyable. A house is not a home unless it has been decked up according to one’s tastes and preferences, especially since one is likely to spend the next few decades living in it. One could design the interiors of the house by referring to a book or hire an architect to draw up the interior plans but implementing these changes sometimes may come at a hefty cost and where does one raise this additional amount. A lot of times one tends to forego or postpone the interiors because it is beyond one’s budget.
HDFC’s Home Improvement loans are just designed to take care of such situations so that one is not forced to live in a house that is not up to the mark. This is even true in the case of an older home where there may be some wear and tear from usage and one may have to get some repairs done.
With a home improvement loan one can explore a whole lot in terms of improving the interiors and the functionality of the home without being concerned about the expenses involved. HDFC offer Home Improvement loans and they give homeowners the financial freedom to do a whole lot of things that will provide their home with the much-needed face-lift!
Issues such as external home repairs, internal and external painting, waterproofing and roofing, plumbing and electrical works, tiling, flooring, works of grills and aluminum windows, and almost any improvement except furniture and woodwork, that will spruce up the home can be addressed. The loan can also finance the construction of an underground or overhead water tank or say, a bore well. If it’s paving of a compound wall with stones, tiles, et al, that will add value to a home, the loan will finance that as well.
At HDFC one can borrow up to 85 per cent of the home improvement costs and an existing HDFC home loan customer can finance the entire cost of improvement of the property already financed by HDFC If you are an existing HDFC customer you can avail up to a maximum of 100% of cost of improvement. Just like home loans, the home improvement loan too is easy to arrange, can be applied for either individually or jointly and is repayable in equated monthly installments (EMIs) over a maximum period of 15 years for resident Indians and 5 years for NRIs.
Like home loans these loans are also offered to customers with different interest rate options, which include fixed and floating rates. A fixed rate provides immunization from any fluctuations in interest rates; hence here in the case of rising interest rates, the risk is borne by the financing company and not the customer.
On the other hand if the customer is willing to take a risk, then a floating rate may be a viable option. The rates on the ARHL will be linked to HDFC’s Retail Prime Lending Rate (RPLR). The rate on the loan will be reset every three months from the date of the first disbursement, if there is a change in RPLR.
For a floating rate loan most institutions reset the tenure of the loan if there are any interest rate changes rather than change the EMI to avoid any immediate impact on the customer. However, in such a scenario the customer should be cautious that such increases in the loan tenure does not go beyond their earning years or into their retirement period. The EMI should also cover the interest portion payable on the loan amount.
HDFC also has a unique 2-in-1 home loan product, where the customer could opt to break up the loan into fixed as well as floating rate loans. Here the loan is broken up into two parts –one portion where the interest is charged at a fixed rate and the other on which interest is charged at a floating rate. The customer benefits both ways, as it helps them hedge their interest rate risk against rising interest rates to the extent of the fixed rate portion of the loan as the rate of interest is not subject to change at all. And when interest rates fall, the floating rate reduces with it and the customer benefits from it.
Apart from the funds that will be available to move ahead with the changes, a major advantage of availing a home improvement loan is the income tax benefit. One can avail of tax benefit of up to Rs.30,000 per annum on the interest paid on home improvement loans.
So if one feels like changing the look and feel of their home, a good option is the home improvement loan. It will not only help in changing the aesthetics of the house but will contribute to a better living environment.
Home Extension Loans
The Home Extension loan facilitates extension of the house to meet the demand of more personal space for a growing family– whether it’s enclosing the open balcony space, adding an extra bathroom or just about anything that would add some space to the house. The maximum amount of such a loan is 85% of the cost of extension.
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