Anamika Verma
posted a blog.
Between 2002-03 and 2018-19, the number of individuals who filed tax returns in India rose sharply by 62%. Individuals today have a much more comprehensive idea about paying taxes than before. Those who have availed financial assistance to afford houses are liable to benefit from home loan tax benefits, which can help reduce their income tax liability considerably.
Understanding tax benefits for home loan consumersHome loans generally come with a substantial quantum, especially compared to unsecured credits. Thus, the tax-savings potential on such a loan is also considerable.•Home loan tax benefits on the interest payments
As per Section 24(b) of the Income Tax Act, 1961, individuals who are clearing their housing loans are liable to benefit from tax rebates of up to Rs.2 lakh in a financial year. The only condition is that the owner must also be residing in the property.Nevertheless, if an owner lets out the property, he/she can avail housing loan tax benefits with no upper limit. Another aspect that homeowners looking to file taxes need to remember is that these interest rebates start from the year when construction of the property is completed.•Tax benefits on the principal payments
Similarly, you can also claim tax rebates on the principal amount of your home loan EMI, under Section 80C. In a year, the maximum permissible tax exemption under this section is Rs.1.5 lakh per annum.•Tax benefits under Section 80EE
An additional Rs.50,000 tax discount is available under Section 80EE of the Income Tax Act. However, to avail this benefit, the borrower needs to ensure three factors.The home loan amount should not exceed Rs.35 lakh and the property value should not cross Rs.50 lakh.The home loan must be approved between April 2016 and March 2017.The borrower should not own another property on or before the loan approval date.•Tax benefits under Section 80EEA
Avail up to Rs.1.5 lakh as tax benefits under this clause of the Income Tax Act. Again, one must fulfil the below-mentioned criteria to be eligible for the exemption –•Value of the property must be lower than Rs.45 lakh.•Home loan for the said property must have been sanctioned between April 2019 and March 2020.•The property owner should not own another home on or before the date of home loan approval.•The borrower must not be eligible for tax exemptions under Section 80EE.Tax benefits applicable for joint home loan consumers
Tax benefits for a joint home loan are considerably greater than for sole applicants. Each loan holder in such an event is eligible to benefit from tax rebates under Section 80C,
Section 24(b), Section 80EE or Section 80EEA. Thus, the advantages are literally doubled for joint home loan holders.
Now that you know all about housing loan tax benefits, you should also start considering the other important factors for such a line of credit.Important things to remember before availing home loans•Home loan interest ratesDifferent HFCs offer varying home loan rates. As a borrower, you must look for the best option as per your repayment ability.•Home loan tenorDue to the significant quantum, home loans come with increased tenor, sometimes ranging up to 20 years. Ensure you pick a repayment tenor according to your comfort. Keep in mind that shorter terms result in minimal interest, but increase the EMI burden, and vice versa.•Home loan documentationBlindly applying for a home loan leads to rejection for the applicant. Apart from the eligibility criteria, you must know about the documents required for home loan approval. Arranging the paperwork should maximize your chances of securing the loan in question. At last, you can apply for home loan by filling online application formKeep these factors in mind to ensure hassle-free loans. Once you acquire the credit, you can calculate home loan tax benefits using a calculator or manually.
Be the first person to like this.
Anamika Verma
posted a blog.
Buying a home isn’t just about ownership, but about independence and security. No wonder then that it is one of the biggest financial decisions you will make. However, instead of waiting until you are 40, you can work towards buying a home while you’re young. This comes with its own set of advantages. With age by your side, you will be able to finance the repayment of a home loan better and choose a longer tenor too.
Keeping this in mind, you can start by seeing if you can get a home loan to finance your home purchase without straining your pocket. First, calculate the home loan eligibility and compare home loan rates from various lenders.
Read on to know why buying a house and applying for a home loan during your youth is beneficial.
You pay lower EMIs
As per the eligibility terms of a home loan, you have to be at least 25 years old in order to apply. This age limit allows you to apply for the loan even while doing your first job. Since you have a long career ahead of you with a lot many earning years, you can choose a long repayment duration to arrive at a pocket-friendly EMI. As your income increases with work experience, you can start paying the full EMI and become a proud homeowner in no time!
You can avail tax benefits for longer
You can claim a deduction of up to Rs.1.5 lakh paid towards the repayment of your home loan principal under Section 80C of the Income-tax Act, 1961 each year. You are also are eligible to claim a tax deduction of up to Rs.2 lakh for the interest repayment on your home loan. You are eligible to claim these deductions in your returns, provided you do not sell the property you own within 5 years of possession. This apart, you can also enjoy these benefits jointly with a co-borrower on your home loan. With such lucrative tax exemptions, a home loan can be a blessing at a young age as this means you can enjoy these tax savings for a long time to come.
You can secure your finances for the future
As an asset, your home, not only promotes financial security, but is also a safe investment option. It also gives you a sense of ownership and is sure to fetch better value for your money as property rates appreciate over time. Thus, when you own a house at a young age, say in your late 20s or early 30s, you not only secure your own future but also secure the future of your family. Start by selecting a property in a good location to ensure its value increases in the near future.
You can enjoy benefits of the Pradhan Mantri Awas Yojana
With the introduction of Pradhan Mantri Awas Yojana by the Indian Government, owning a home has now become a more affordable proposition. This plan offers interest subsidies on your home loan, which you can claim basis the group you qualify for with respect to your family income. This scheme also offers special preference to women and promotes the construction of affordable housing in the country using eco-friendly materials. So, as a first-time homeowner, you can avail the benefits of PMAY to save more. Since this scheme will be available only until 2019 or 2022 depending on which income category you qualify for, applying now, while you are still young, can be a boon.
Keeping these benefits in mind, apply for a home loan now without delay so that you can use the age to your advantage. Before applying, make use of home loan EMI calculator to decide on an EMI befitting your income.
Be the first person to like this.
We are committed to finding the best deal for your family and business. We work with a variety of lenders to tailor our loans to meet the country's specific credit needs so that rural and regional households and farmers can get competitive loans tailored to their needs http://www.regionalruralfinanc... View More
Like
January 14, 2023
Anamika Verma
posted a blog.
When you want to get ready access to funds, but do not have a property to pledge, availing a personal loan can fulfill your purpose. This loan amount is not considered part of your income, and is, therefore, not taxable. However, there is a rider. You must acquire the loan amount from a bank or a non-banking financial institution.
The loans secured from other sources that are not known does not allow you to obtain income tax deductions, but instead, attract taxes. Many people are not even aware that seeking personal loans is a tax-saving option. Let’s look at how a personal loan attracts tax benefits.
What are the conditions?
If you want to get deductions on income tax with personal loans, the way in which you use the loan amount is significant. If you refurbish your home, repair or reconstruct your home with the amount, you can claim tax benefits. You should use the personal loan for a specific purpose to avail tax benefits.
The only thing you need to do is to preserve the bills and the charges of labour to prove that the loan amount has been used for repairing or reconstruction. Checking the personal loan eligibility and documents carefully is necessary when you want to avail the loan.
Government regulation for tax
According to the current income tax regulations, the government allows tax deductions for repairing the home. If you have utilized the personal loan amount for repairing your home or reconstruction of any property in the existing premise, it is going to be an expense for claiming the deduction. The amount can also be used for making a down payment for the property to avail tax benefits.
However, the entire amount you repay is not considered for tax benefits. It is only available on the interest amount you pay against the loan instead of the principal amount. If the loan amount is used for your business, the interest you pay back is considered a business expense.
Therefore, for a self-owned house, you can enjoy deductions up to Rs.2 lakh. But if the property is to be rented out, then there is no limit on the maximum amount – the entire interest paid on the personal loan can be considered for tax benefits.
Purchasing an asset
When the loan amount is used for the purchase of an asset such as a non-residential house, shares, or jewelry, the amount of interest to be paid on the amount of the loan is added to the cost of the acquisition of the asset.
However, the tax deduction will not be allowed in the year of the payment of interest but the year in which the asset is sold. This provides an opportunity to reduce capital gains and enhance the cost of acquisition thereby leading to substantial tax benefits.
Things to know
When you track information on how to apply for personal loan and the tax benefit it provides, you will come to know that no tax is levied on the amount as it is a loan and not income. However, you must establish proper evidence that the loan has been utilised for the purpose specified to avail the income tax deductions.
Additionally, you must preserve a copy of all the documents of the loan including the ones showing the amount taken and the interest to be repaid.
Claiming the tax benefits
According to the sections of the Income Tax Act, there is no specified guideline about the deductions you can avail on a personal loan. However, using the amount of the loan in the right way allows you to claim the benefits while filing the returns.
As a result, personal loans are an excellent option to obtain funds quickly when needed, while also providing tax benefits. Bajaj Finserv offers personal loans, amongst others, to help you meet your financial requirements. Share a few, basic details to check out your pre-approved offers.
Be the first person to like this.
Anamika Verma
posted a blog.
Buying a home involves an array of expenses in addition to the cost of the house. So, it’s important that you factor in all such expenses when drawing up a budget to ensure there are no unpleasant surprises later on. Stamp duty and registration charges are two such costs to consider.
The Indian Government levies a stamp duty tax on your home purchase transaction at a pre-meditated rate. This is an unavoidable process, as it legalises your purchase documents and is required by law. Read on to learn more about stamp duty and how to calculate stamp duty.
Importance of Stamp Duty
Stamp duty establishes you as the legal owner of the property you are buying. Taking physical possession of the house is not enough and you have to register the property in your name in order to have ownership. Once you pay the required stamp duty tax you will be able to get a stamp on all your home purchase papers, certifying you as the legal owner of the property.
When is Stamp Duty Payable?
You have to pay stamp duty at the time of registering your property. The stamp duty tax is levied on the monetary transactions you undertake basis the conveyance deeds, sale deed, and power of attorney papers in order to complete your home purchase.
How is Stamp Duty Calculated?
Though stamp duty is governed by the laws of the Indian Stamp Act, 1899 and the Bombay Stamp Act, 1958, most states make minor amendments to the same. Owing to these alterations, stamp duty varies across Indian states and typically you will have to pay 5–7% of your property’s market value as stamp duty. Recently, in Maharashtra, the rate went up from 5% to 6%.
If you’re wondering how stamp duty is calculated, note that it is a fixed percentage of either of the following two factors.
On the Total Value of the Property
Here, the property value at the time of registration is used to calculate stamp duty. Thus, the stamp duty increases or decreases according to the property value. Your best move will be to register your property without much delay and pay stamp duty on it before the property’s value appreciates.
As per the Circle Rate
Here, the stamp duty is calculated based on the circle rate of the property, which is determined by the local real estate authorities. The circle rate is the minimum value at which a property can be sold.
Here, the one that is higher is taken into consideration. For instance, if the circle rate is higher than the property value, then the stamp duty is calculated as a fixed percentage of that rate.
5 or 7% may seem like a small amount, but stamp duty can go up to several lakhs. Therefore, you should calculate stamp duty charges using the stamp duty calculator in advance. Once, you arrange the funds for stamp duty and registration charges, start scouting for a low interest rate home loan in order to complete your home purchase.
Be the first person to like this.
Anamika Verma
posted a blog.
An Indian wedding is never a simple affair. In recent times, destination weddings and pre-wedding photo shoots have upped the cost manifold. Even though weddings can be a costly affair, every parent wants his or her child’s wedding to be special.
Since marriage expenses can turn out to be enormous, many couples and families borrow money to prepare for the occasion. Hence, an unsecured personal loan can be the best solution. Reputed non-banking financial companies such as Bajaj Finserv provide personal loans that can be used to finance weddings.
Benefits of availing an unsecured personal loan for weddings
There are various benefits of availing an unsecured personal loan for a wedding. Here are some significant benefits:
1. Instant disbursal of credit: When wedding preparations are in full swing, the need for cash always arises. A cash crunch could affect the preparation and families involved. However, if you apply for an unsecured personal loan, you can get instant approval on the same. These days, the time taken to process a personal loan is minimal due to quick online processing. NBFCs such as Bajaj Finserv take only 24 hours to approve your loan if you meet all the eligibility criteria for personal loan. Once your loan is processed, you can proceed with all the expenses without interruptions, be it booking the venue or hiring the best caterers in town.
2. Usage of funds at your discretion: An Indian wedding is not a single-day affair; in some cases, it can stretch over a month. It could begin with a ring ceremony, and end when the married couple return from their honeymoon. In addition, there are various rituals, gifts and many other events that need to be arranged. A personal loan taken for a wedding gives the borrower the freedom to use the funds at his or her disposal, without the lender monitoring the finances. The borrower can use the money for any wedding-related expenses, be it to arrange the venue or buy tour packages for the honeymoon. The funds can also be used to purchase jewellery for the bride, groom and close relatives and arrange for the wedding attire, decoration etc. You can also choose to opt for a Flexi Personal Loan where you can borrow when you want pre-pay when you can from a sanctioned loan amount. You need to pay interest only on the amount utilised and not the full amount. You can also choose to pay only interest as EMI and the principal amount at the end of the tenor. This helps to bring down your EMIs by up to 45%.
3. Simple Application Process: In this age of digitalisation, you can apply for personal loan with a few clicks of the mouse. You need to choose a lender who provides an online personal loan and visit the respective website or mobile application of the lender. On visiting the site or app, you will find an application form for the loan to be filled and submitted along with the required documents. Once you upload the documents, you will receive a call from the lender representative. If all the documents are in order, they will be verified, and once the representative deems the documents as right, your credit will be disbursed in a few hours. A personal loan application for a wedding purpose does not burden families, instead helps them plan the wedding according to their desires without hassles.
4. Flexible tenor and EMI: A personal loan can be the best credit option for a marriage ceremony. This is because the couple or the borrower of the loan can determine the tenor or the loan and the monthly instalments. A few responsibilities come into play once two people get married. Hence, if the EMIs and the loan tenor are lower and flexible, it can facilitate easy repayment. Before applying for personal loans for marriage, you can learn how to calculate personal loan emi using Personal Loan EMI calculator and compare the EMIs from various lenders to choose an appropriate one.
5. No need for collateral or security: To ensure that their child has a grand wedding, some parents opt to liquidate their assets or investments. Personal loans eliminate the need to liquidate investments and keep assets as mortgage. An unsecured personal loan is collateral-free that means you do not need to keep any asset as collateral. Moreover, there is no requirement for any guarantor as well. All you need to avail a personal loan is an excellent credit score and a valid purpose.
6. Loan at a low-interest rate: Financial and non-banking financial companies offer preapproved loans to customers. These offers are given on the basis of the borrower’s credit history. If the credit history is excellent, then lenders approach the borrower to avail personal loan at a discounted rate of interest. If you have such offers, you may want to avail a personal loan for the marriage at a lower rate of interest that can save you money and effort.
NBFCs provides pre-approved loan offers and various others financial products. You can avail a personal loan for your marriage from NBFC at reasonable interest rates with flexible tenor and fulfill your desires of having a lavish wedding.
Be the first person to like this.
Anamika Verma
posted a blog.
Lack of financial discipline can lead to larger debts and defaults in repaying loans. This can affect your CIBIL score and your financial credibility. It is critical to maintain credit discipline and make personal loan repayments a priority. Personal loans should be chosen after careful analysis. Opt for pre-payment and pre-closure of your personal loans whenever you can.
In these times of easy credit availability, it is common to get caught in a debt trap. Loans have become commonplace and most salaried individuals have EMIs that they need to pay. Due to a rising standard of living in most Indian cities, credit card debt tends to pile up. Emergency expenses in the family may lead to further accumulation of debt. Many urban households struggle to make personal loan repayments and to bring instability in their financial situation. Moreover, a poor repayment history can negatively affect your CIBIL score and create a dent in your creditworthiness.
There are certain safeguards that you can take to ensure that you have your finances under control:
1. Take loans only when necessary
If you already have monthly EMIs and credit card payments to make, you need to think twice before taking on additional debt. Loans come with an obligation to make monthly repayments. Always evaluate whether you will be comfortable paying the additional EMIs that come with a new loan. The personal loan EMI calculator will help you to make an assessment of the affordability of the loan. Ideally, the compulsory payments that you need to make in a month should be less than 50% of your monthly income.
2. Choose your personal loans with care
Personal loans should be chosen after detailed analysis. Compare the personal loan interest rates offered by various financial institutions and the terms and conditions of the loan agreement before you take a decision. Careful analysis can help you uncover loan offers that are more beneficial and economical.
3. Make repayment of loans a priority (credit discipline)
You need to maintain credit discipline and make repayment of loans your priority. You need to ensure that the EMI dates fall immediately after your salary date, in order to ensure that adequate funds are available on the due dates. Closely keep tabs on your monthly expenses and reduce unnecessary spends until your loans are paid off.
This will help in maintaining a credible CIBIL score and enhance your creditworthiness.
4. Debt consolidation
You could consolidate all your debt accounts under a debt consolidation loan with a lower interest rate. This will enable you to pay off some of your more expensive loans and have more control over the repayment. Moreover, instead of paying multiple interest rates on several products, on differing days, a Personal Loan can be used to pay off all your debt, while ensuring ease in repayment.
5. Pre-payment and pre-closure
If you have a windfall, the surplus amount should be used to prepay a part of the principal amount. You could consider pre-closing some of your loans if you have sufficient funds. The personal loan part pre payment calculator will help you find out the reduced EMI amounts. The personal loan pre closure calculator will help you to find out how much interest amount can be saved by pre-closing the loan.
Be the first person to like this.
Anamika Verma
posted a blog.
The Indian real estate market is getting favourable to make the long-awaited home purchase. There are few things that one needs to tick off before becoming a homeowner.
Investing in and owning a house is probably the biggest investment. Therefore, one should pay good attention to every detail entailed with it.
Let us help you get ready with a checklist that will help you get well prepared while applying for the home loan and eventually becoming the homeowner.
Improve your Credit Score
The first thing that one must tick off while prepping for a home loan is the Credit Score. A good Credit Score will always land you with better deals and offers. A Credit Score above 700 is always considered to be good; whereas anything below 500 will make it difficult. It is important to pay off all your past debts such as loan debts, credit card EMIs etc. to maintain a higher Credit Score. Also, avoid applying for a credit card a year before you plan to go home loan shopping.
Define How Much of a Home Loan can You Afford
One aspect is how much home loan you are eligible for, and another one being how much can you afford. For that you can utilize the home loan amount eligibility calculator which is easily available on lender’s website. The first one gets defined on the basis your Credit Score and definite monthly income. However, the latter is something for you to define. For instance, along with paying off the loan, there are other financial liabilities one may be liable. Therefore, keep all the other expenses into consideration and accordingly define the amount that you can afford to repay.
Keep the Down Payment Ready
From the developers’ offer and project, one must be ready with up to 15-20% of the home cost amount as a down payment. Also, the higher down payment you are likely to make, the lesser EMI will be implied on the principal amount.
Work towards a Healthy savings Account
Building a healthy savings account will not only help you in the home loan process but the long run as well. For instance, it ups your scores when the lender is aware of the additional money cushioning you possess. It is good to have a sufficient amount that could be equivalent to three to five months of EMI payment. Also, the money can be utilized for last minute house repairs or other expenses.
Get Pre-approved for a Mortgage
While you are looking out for your dream home, it is also equally crucial to look for the right loan offers. Research for the current home loan interest rates and what different banks and lenders have to offer you will help you. In turn, it helps you understand the amount you can accumulate through a home loan and look for a house that completely fits your bill.
Buy your Dream House
With most of the points taken into consideration and ticked off, it’s time to look for the ideal house. It is advisable to make a checklist of things that are must in your dream home and things you can do away with.
For instance, a school in the vicinity might be a priority for your kids future; whereas, you are ready to do away with gym and other extra amenities within the complex.
Also, it is vital to look for a house that fits your financial planning in terms of repaying the debts etc.
The Bottom Line
Home buying and applying for a home loan can be a tedious task. However, a little bit of planning and organizing the information can help you yield the best results and deals. Get your checklist ready and get started towards a journey to own your abode.
Be the first person to like this.
Anamika Verma
posted a blog.
A salaried individual survives the month on a fixed income. However, in times of emergency more funds than what is available might be needed. Here is where a personal loan for salaried employee comes in handy. Taking due precautions before availing the loan can lead to a satisfying and hassle-free experience later on.
A salaried individual has to live a very disciplined life. It is true that getting a salary at the end of the month gives one a feeling of stability and security in knowing that a certain amount is going to come to the bank account every 30 days – an assurance that a business owner does not have.
But, this also means that he has to make do with that same amount every month. So, a disciplined lifestyle needs to be followed in which frivolous expenditures need to curbed and only the essential things need to be purchased. This is where a Personal Loan for Salaried Employee is particularly useful.
Here are some tips which will ensure that you get the sweetest deal on your personal loan.
1) Research thoroughly
In the haste of securing funds to meet your emergency expense, caution may be thrown to the wind. Only to regret later. Before opting for a personal loan, it is prudent to do your due diligence and check out the interest rates offered by various financial institutions and banks.
Since personal loans are unsecured loans, they are offered with a high rate of interest. So, fishing for the lowest interest rate can yield healthy dividends in the long run. You can also ask the bank in which you have an account to give you a discounted rate, by virtue of you being their valuable customer.
2) Make sure you’re eligible
To get a Personal Loan, you can check your eligibility online using the personal loan eligibility calculator. These vary from lender to lender, but here are some common requirements that most ask for. Among these, job stability and a high income are the primary demands. A person needs to be employed for a healthy duration either with an MNC or a public/private company.
Another requirement is high income, and it depends on the city of residence. For example, Bajaj Finserv has a minimum salary requirement of Rs.37,000/month for a person living in Mumbai. Whereas the requirement comes down to Rs.27,000/month for places such as Goa, Nashik or Lucknow.
3) EMI amount is crucial
When you go for a personal loan for salaried employee, there is a monthly EMI that needs to be paid every month, till the time the entire amount is not paid off. This EMI will have to be paid from your monthly salary, so the highest amount that you’re comfortable paying after taking care of your daily expenses is what should be opted for.
You can select an EMI you’re comfortable with by reducing the loan amount or by extending the tenor of the loan.
4) Beware of hidden charges
Loans often come with hidden charges such as processing fee, late payment fee, EMI bounce charges and pre-payment fee. When going for a loan, one needs to take these charges in to consideration so that they don’t come as a surprise later.
Be the first person to like this.
Anamika Verma
posted a blog.
Pune has been affectionately referred to as the Oxford of the East and is the 9th highest populated Indian city. Pune is one of the fastest growing cities in the entire Asia-Pacific region. Economic growth has transformed Pune into a mega city and the real estate sector has benefited tremendously here as a result. There is now higher demand for Home Loans and premium projects like Godrej Infinity in Keshav Nagar, Pune have changed the city’s skyline as well. The introduction of the Pradhan Mantri Awas Yojana has also given a major fillip to the real estate sector in the city, sparking demand for affordable housing and mid-income properties alike.
Pune is now one of the biggest business and commercial hubs in India and this has contributed towards making it one of the country’s hottest property destinations as well. The city is a hub for the IT and automobile sectors along with becoming a major start-up zone too. Pune offers great connectivity to Mumbai which is India’s financial capital and is the 6th wealthiest city in India too with the second highest GDP in Maharashtra after Mumbai. Manufacturing, tourism, education and other sectors have created innumerable jobs in Pune and several MNCs and large companies have been setting up offices and campuses in the city over the years.
Economic and commercial growth has given a major fillip to demand for property and there are excellent prospects for appreciation in property prices over the next few years. With the continual influx of professionals into the city for employment and business purposes, the real estate market will continue to thrive. Also, the government and authorities are fast tracking connectivity and infrastructure projects including the development of peripheral zones. Pune got the Oxford of the East moniker due to its flourishing educational sector, encompassing more than 800 colleges and other educational institutions. The IT sector is thriving in the city along with the automobile, engineering, financial services and other sectors. Pune is one of the top 5 FDI destinations in the country and is home to more than 400 startups.
Pune has always been home to mega conglomerates such as Bajaj, Tata Motors and Finolex and now there are more big players in various sectors including Wipro, IBM, Accenture and more companies in the IT and ITeS corridors which cover the entire stretch from Balewadi and Baner to Yerwada, Magarpatta and Kharadi. The Pune Municipal Corporation is actively working with the Government in order to fast track key infrastructural projects. These are factors which have increased demand for property in Pune along with its wide roads, well-planned layouts, abundant trees and natural greenery and pollution-free ambience. If you are planning to buy a home in Pune, make sure you select the best Home Loan scheme in Pune as per your needs. Also, utilize the online Home Loan eligibility calculator tool in order to determine the amount you will be eligible to get as the Home Loan.
Be the first person to like this.
Anamika Verma
posted a blog.
Our home is one of the most important things to us and keeping it up to date is a must. With inflation on a continuous rise, it has become more difficult than usual to set aside a significant amount that covers all the necessary renovation expenses.
The only rational way that a working person can think of bearing such huge expenses is by taking up a Home Renovation Loan. However, there are so many types of home renovation loans that choosing the best depends entirely on your requirement and situation.
The two most common funding schemes used for such needs is either a home equity loan or an instant personal loan. This article will compare both home renovation loans based on five primary criteria. It will give you an overall idea of which loan type might be beneficial.
1. Availability
The availability of funds is a crucial aspect when it comes to home renovation loans. In case of home equity loans, the duration of verification and final approval can be extended. This delay might cause a negative impact on the renovation process especially if you need the funds immediately. Whereas, personal loan benefits also include accumulation of funds even on short notice. It means you will have the home renovation loan amount ready for use in your bank account in one-fourth of the usual time.
2. Fee structure
Let's be frank, the fee structure and interest rates of the financing firm matters a lot while taking a loan. Home equity loan interest rates are much higher in case you are looking to borrow a small amount. It adds to the pressure of paying massive interest than various other home renovation loan options. On the other hand, the interest rate on personal loans is in proper proportion to the small and medium size of the funds.
3. Stakes
Comparing the stakes that each home renovation loan type requires you to put is also crucial in order to make a sound decision. By opting for home equity loans, you put your residence as collateral against the debt. In case you fail to repay the amount then there are higher chances of you losing your home to foreclosure. However, if you are not able to clear your personal loan, then it can ruin your credit rating. But it will still not take away your home.
4. Tax benefits
With such high percentages of the deductible, tax benefits usually come as a saving grace. If you are looking for similar perks, home equity loans are the way to go. They can be formally used to get reimbursement on your tax deductibles. Personal loans on the other side do not have any such advantages. So overall, if you are looking for a home renovation loan that also gives you tax benefits, then home equity financing is the right answer.
5. Loan amount
Lastly, the ideal type of personal loan also depends on the size of the amount that you are looking to borrow. You can try using one of the personal loan eligibility calculators online to find out if your amount qualifies for this type of financing service.
Consider lenders that offer pre-approved offers on personal loans and a host of other financial products. All you have to do is submit your basic details and check your pre-approved offers. This will help you save time and you can move forward with the renovation process easily.
Be the first person to like this.