Return to site

Essential Prerequisites to Consider Before Taking a Home Renovation Loan

· Mortgage Loan,LAP Interest Rates,How to Apply LAP

Home renovation loan basically refers to any credit taken for managing the cost of renovating the house. Generally, a personal loan is preferred over other schemes for the mentioned purpose, especially by people who don’t have a fitting collateral to pledge. However, if you have a collateral/ asset and you don’t mind pledging it owing to your good repayment capacity, you can go for a loan against property and use it for paying the cost of home repair & renovation work.

On that note, if you plan to go with the loan against property for home renovation, below are some crucial prerequisites which you must follow.

  1. A good credit history is a must: Though it is suggested to maintain a good CIBIL score along with a good credit history, the credit score hardly plays a role in the approval or interest rate calculation. Therefore, you can do away with credit history but maintain an unblemished credit history.
  1. Keep your debt-to-income ratio low: Generally, it is advised to keep the debt-burden or DTI ratio low while applying for a loan. It is the ratio of your income to your liabilities and it shouldn’t be more than 43%.

  1. Dispose of your existing loans before taking a fresh credit: Last but not least, dispose of your existing loans to improve your repayment capacity. You can do so by using your investments or by taking another loan at a lower interest rate.

Since you are taking a loan for the purpose of home renovation, you must be aware of the applicable tax benefits. Check out the internet for the required information.

All Posts

Almost done…

We just sent you an email. Please click the link in the email to confirm your subscription!

OKSubscriptions powered by Strikingly