Home renovations and repairs can be an expensive affair yet often necessary. Urgent home repairing projects such as structural repairs cannot be put off while updates in home finishes are essential, if you are considering selling your home.
The most common way to obtain money for home renovations is through a home renovation loan. Such loans are secured on the equity accumulated in your home and are usually structured for a fixed period of time i.e. 3 to 10 years. If you are thinking of applying for a home renovation loan, it is important to understand the requirements and prepare your application as needed.
Estimate the total project cost
It is imperative to estimate the cost of your home renovation project to determine the loan amount. It is best to get estimates from multiple contractors to ensure you get the project completed at the best price. Also, make an allowance of about 10 to 20% while finalizing your loan amount, to deal with any unexpected costs that may arise.
Know your credit history
Your credit score and credit reports available at CIBIL and similar organisations carry the most weight for lenders making the loan decision. Before applying for a home renovation loan, check your CIBIL credit score for any discrepancies that may look fraudulent or inaccurate. And if you find any, take the necessary steps to resolve the issue with the lenders before applying for the loan.
Review all necessary information
When applying for any loan, you will be required to submit several important documents such as proof of employment, proof of additional income, and income tax-related documents that span several years back. It is recommended to check these documents for any inaccuracies and if found, rectify them at the earliest.
Apply to several different lenders
It is essential to apply multiple lenders for your home renovation loan, as it can help you obtain the most favourably structured loan. When applying, present a detailed description of the home renovation project to the lender for review, as it shows that you understand the project thoroughly and increase your chances of getting the loan.
If you’ve been dreaming of an updated bathroom, that bigger kitchen, or simply adding more living space, a home renovation loan can help you complete your dream improvements.