Today personal loans are used for plenty of reasons. A personal loan can be used to complete different needs, from buying a new car to fulfilling your study requirements. If you want to renovate your home after a long while, a personal loan comes in hand.
It is true that you would need a large sum of money to renovate your home. You will definitely look for the lowest personal loan rates in order to avail the best benefits. If you want to make things pretty easier for yourself, you can think about a home renovation loan. It is similar to a personal loan but tailor-made for home renovation purposes. Indeed, a personal loan for home improvement is a great choice as you will get a lower interest rate.
What Is Home Renovation Loan?
It is a type of personal loan that is used against home renovations. With this loan, you can renovate any part of your home, be it a kitchen, bathroom, bedroom, etc. Additionally, this type of loan can be used to cater to emergency repair and small maintenance costs as well. Some lenders may separate home renovation loan from the personal loan, but it is considered the same.
Here are some of the basic features of a home renovation loan that you need to understand:
- No collateral Security Required: In this loan, you don’t need to present collateral security. Your property will not be at risk.
- Higher Interest Rates: Compared to other loans, home renovation loans have high-interest rates.
- Fixed Monthly Payment: There will be a fixed monthly payment which will be set for certain years. You will know exactly how much you have to pay.
- Lump-sum Funding: This is one of the fastest to acquire a loan. You can get the amount credited to your account within two to three days.
Is It Smart To Use Personal Loan For Home Renovation?
As these are unsecured loans, they will have higher interest rates. However, for home loans, you need to present collateral. Also, you would need enough equity. With a home renovation loan, you will not require any collateral or equity, and everything will be approved within a short span of time.
You must be careful about if you default on your loan; you can expect a significant fall in your credit score. In some cases, there might be a stay on your credit record.
Applying for a home renovation loan is way simpler than applying for other loan types. You have to show multiple financial documents in order to get the loan approved. The Home renovation loan, on the other hand, requires no prolonged documentation.
What Are The Pros And Cons Of Home Renovation Loans?
It is important to understand what are the merits and demerits of this loan type before you make a decision.
- No-Risk: There are no risks of losing your house as you are not keeping your home as collateral for availing of the loan.
- Fast Funding: You don’t have to wait for months in order to get your loan approved and credited. Everything will be done within days.
- Low Fees: Banking institutions or lenders will not charge you hefty processing or commission fees for this type of loan.
- High-Interest Rates: The major drawback of this loan type is its high-interest rates which can be hefty on you.
- No Tax Benefits: Unlike other loans, there will be no tax benefits against this type of loan.
- Lower Maximum Loan Limit: The maximum limit for the loan amount will be lesser in this type of loan. You will have to arrange more funds if you need to renovate your house in a better way.
The Bottom Line
The home renovation also required pretty much funding, and sometimes, you may need a loan. Personal loans for home renovations have become popular due to their ease of availability, no risks, and lesser fees.