hYou can easily avail home loan from various companies which offer home improvement loans to finance the cost of tiling, plumbing, electrical work, grills, woodwork, painting, compound walls and almost all improvements for your house. In fact it might be a good idea to avail of these home loans, because they offer a number of added advantages as well.
One of the most important benefits of taking a home loan is the interest rate that is allowed on the home loan. Fixed and variable interest rate options are also available for home loans. Many financiers also offer home improvement loans at the same interest rate as they offer the home loans. Most of the prevailing interest rates fall in the range of 7.75% to 8.75%. There is usually a processing fee of 1.00% to 2.00% also that is involved.
The other benefit of taking a home loan is the security that is to be provided. The benefit is that you can use the property that is currently being constructed as the security for the home loans. Of course, most banks and finance companies do not finance more than 85% of the cost of the property mortgaged.
Perhaps the benefit that is most used is that of the tax benefit. The interest that is paid on home loans are deductible from the annual value resulting in a lower taxable income. For self-occupied property, interest to the extent of Rs 30,000 is deductible from taxable income.
The maximum amount of fund that can be received through the home loans varies between 50%-100% of the total cost. Of course the loan amount is also subject to the repayment capacity of the borrower. The usual rule states that the sum of all the monthly installments a borrower has to pay should not exceed 40%-50% of his gross monthly income.
Apart from the income and margin criteria, the applicant needs to be a salaried or self-employed individual. And it is important that the loan is repaid before the retirement stage, or before the person turns 65 years in case he/she is self-employed. On an average the repayment term of the home loans can be extended up to 15 years.