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Renovation loans give your home a new look

It's March and in a few months school holidays would begin. This, therefore, is the time to plan for vacation trips and also the major tasks e.g. renovating your dream home.

As time goes by, paint peels off, pipes start leaking, tiles crack, kitchen fixtures break, and your erstwhile 'beautiful' house looks dilapidated and shabby. Even if things are still fine, your children's room may need re-modelling as they grow up... small bunk bed and cartoon-decorated walls may no longer work. 

All this not only requires time and effort, but also money. It is often seen that the house maintenance gets deferred if their is a cash crunch.

However, given that banks offer attractive loans for home improvement and renovation, lack of money should no longer be a constraint. And don't forget, you also get tax deduction on such loans.

A few salient aspects of such loans are as under:

- Almost all banks offer such home improvement / renovation loans.
- The loan can be availed for a very wide variety of jobs such as alterations, additions, repairs & maintenance and renovation e.g. painting, electrical work, waterproofing, plumbing, flooring, woodwork, construction of water tanks and much more
- Since these are secured loans, the interest rates are at around 10-15%, i.e. much lower than the personal loans 
- Some loan processing fees may be levied
- Loan Tenure can be even up to 15-20 years
- Some banks do provide 100% financing, though 75-80% is the general norm
- Apart from the usual documentation such as KYC, Income Statements, Address/ID proof etc., for home renovation banks may also ask for architect's cost estimate, NOC from housing society and municipal corporation, if necessary 
- Banks may also conduct physical verification of the property before and after the renovation to ensure that the amount has been rightly spent
- By the way, very old properties (more than 35 years) are generally shunned by the banks for extending renovation loans

Coming to the 'all-important' tax benefit — Interest paid up to Rs.30,000 on home renovation loans can be deducted from your taxable income every year for self-occupied property (rented properties get full deduction with no limits). As, over the years, you would have paid-off a part of your home loan, there would be a gap between your actual interest outgo and the Rs.1.50 lakh limit. 

One crucial difference vis-a-vis a home loan for 'purchase' of property is that herein principal repayments get no tax benefit.

So go ahead and give back your house the beauty and vitality that it has lost due to ageing... and save some tax too in the bargain.

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