As per RBI reports, the growth of credit witnessed a sharp decline from 13.5% to 8.5%, along with the fall in the service sector. Among this deceleration, the personal loan segment noticed a growth of 16.9%, and along with that, the housing loan sector was clocked at 18.4%.
A house requires occasional renovations from time to time. Individuals can opt for a house renovation loan in such cases. This way, they don’t have to utilize their savings and can meet their financial requirements conveniently.
Avoid these factors while opting for a home renovation loan
Home renovation can be a pricey affair due to the rising labor cost, materials, and other essential things. In such cases, a home renovation loan can be highly beneficial for remodeling, updating, renovating, and repairs at affordable rates.
Before undertaking this new venture of renovating or refurbishing their home, individuals can pick a hassle-free personal loan and repay it at their convenience. This collateral-free loan offers flexibility regarding the usage of funds and allows borrowers to meet their varied financial requirements.
But before opting for a personal loan for a house renovation, individuals should keep certain things in mind.
-
Insufficient research on loan offers
In contrast to popular belief, the ideal personal loan is not always the one with affordable interest rates. Though it is wise to go through the offerings depending on that criterion, one should also research other factors. Ideally, it is best to consider a house renovation loan with low-interest rates and a host of other features.
In such cases, borrowers can use a personal loan calculator and determine the exact amount that one is eligible for. This will allow borrowers to budget and plan their house renovation projects accordingly.
-
Not checking the CIBIL score
One of the effective ways to avail of an affordable personal loan for the house renovation is by applying with an impressive credit profile. It means that one should have a healthy CIBIL score of 750 or above. Lenders often consider 650 as a decent score and offer them favorable loan terms. However, borrowers must know how to improve their personal credit score by following certain tips such as timely repayment, maintaining credit utilization ratio, avoiding applying for multiple loans at a time, etc.
-
Not maintaining FOIR
With affordable interest rates, borrowers can enjoy a hassle-free borrowing experience. However, lenders offer competitive interest rates to borrowers with a history of making timely repayments. Borrowers can show their ability to make timely repayments if their income is not overburdened with monthly obligations.
To avoid this, borrowers need to maintain their debt-to-income ratio or FOIR of less than 40%. With low FOIR, one can ensure availing of better loan offers and make repayments comfortably.
-
Not checking repayment options
Another crucial point to check before applying for a house renovation loan is the repayment options offered by the respective lender. If the lender provides a pliable tenor and various payment options, it is convenient for the borrowers to repay the outstanding amount.
Besides, borrowers must also check prepayment options to allow them to pay off substantial amounts quickly and close the loan before the stipulated tenor.
-
Failing to consider eligibility criteria
Before applying for a personal loan for home improvement, individuals must thoroughly check the eligibility criteria and arrange necessary documents to ensure a hassle-free loan application. Meeting the qualifying parameters diligently will allow individuals to obtain their preferred loan amount. However, one must note that the eligibility requirements and documentation for salaried and self-employed are different.
One can also apply for an instant personal loan for salaried or self-employed from different online applications without going through heaps of documentation and meeting stringent eligibility parameters.
Apart from these, reputed financiers have also developed personal loan apps that are available online to make the borrowing procedure more convenient. These applications can be accessed anywhere and anytime and help save time and effort.
Moreover, for eligible borrowers, leading financiers like Bajaj Finserv extend pre-approved offers on a wide range of financing options such as personal loans, credit card loans, business loans, etc. These offers play a significant role in expediting the loaning procedure and reducing documentation hassle. Therefore, individuals can check their pre-approved offers by mentioning their names and contact details.
When borrowers are availing of a house renovation loan, it is wise to consider factors like loan quantum and tenor to maximize the benefit of the respective financial product.
