Your home deserves an upgrade—and with a home improvement loan in India, renovating your space is now affordable and hassle-free. Whether it’s a kitchen revamp, flooring, or structural repairs, a loan for home renovation provides the financial support you need without dipping into savings.
Backed by top banks and housing finance companies, these loans offer low interest rates, flexible repayment, and tax benefits—making them ideal for every homeowner planning a makeover.
Home Improvement Loan Highlights
Here’s a Highlights Table that combines the Key Features and Top Benefits of a Home Improvement Loan:
Feature / Benefit | Details |
---|---|
Interest Rates | Starts at 8.00% p.a. – lower than personal loan interest rates |
Loan Amount | ₹50,000 to ₹50 lakh based on income and lender criteria |
Repayment Tenure | Up to 15 years for comfortable EMIs |
Collateral Requirement | Usually requires mortgaging the home being renovated |
Tax Benefits | Interest up to ₹30,000 deductible under Section 24(b) of the Income Tax Act |
Usage Flexibility | Funds can be used for flooring, kitchen, painting, tiling, waterproofing |
Quick Processing | Approval in 3–7 working days; faster for existing home loan customers |
Disbursal Mode | Lump sum or phased release based on renovation progress |
Preserves Savings | No need to tap into emergency or long-term savings |
Increases Property Value | Renovation enhances resale and rental potential |
Home Improvement Loan Interest Rates by Top Banks
Let’s take a look at the Interest Rates and Processing Fees by Top Banks:
Lender | Approx. Interest Rate (p.a.) | Tenure |
---|---|---|
Bank of Baroda | ~ 8.00% p.a. | Up to 15–30 years |
PNB Housing Finance | ~ 8.25% p.a. (floating rate) | Up to 20–30 years |
Canara Bank | ~ 6.90%‑10.25% p.a. (RLLR‑linked) | Short‑term (≤ ~5 years) |
HDFC Bank | ~ 7.90%‑8.15% p.a. (latest MCLR rates) | Up to 15–20 years |
Kotak Mahindra Bank | ~ 7.99% p.a. onwards | Up to 15 years |
Processing Fee and Other Charges for Home Improvement Loan
Here’s a table showing the processing fee and other common charges for a Home Improvement Loan in India (as of 2025):
Charge Type | Typical Amount / Range |
---|---|
Processing Fee | ₹1,000 – ₹10,000 or 0.25% – 1% of loan amount (plus GST) |
Documentation Charges | ₹500 – ₹2,000 (may be included in processing fee) |
Legal & Technical Fee | ₹2,000 – ₹5,000 (for property verification and technical evaluation) |
Prepayment Charges | Salaried (floating rate): Usually NilOthers: 2%–4% on prepaid amount |
Foreclosure Charges | 0% – 4% (depends on loan type and lender) |
Late Payment Penalty | 2% – 3% per month on overdue EMI |
Stamp Duty (Loan Agreement) | As per state laws (usually a few hundred rupees) |
Conversion/Restructuring Fee | ₹500 – ₹5,000 (if you switch to a lower rate later) |
Suggested Read: All About Home Improvement Loan

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Home Improvement Loan Eligibility Criteria
Eligibility for a home improvement loan depends on a variety of factors, including:
Eligibility Criteria | Requirement |
---|---|
Age | Minimum Age: 18 years Maximum Age: 65 years |
Resident Type | Indian |
Employment Status | Salaried Self- employed |
Residence | Permanent Residence Or a rented residence where the applicant has resided for at least 12 months before applying. |
Credit Score | A good credit score of at least 700 or more issued by a recognised credit bureau |
Existing Debts | If you have existing loans, the lender will assess your debt-to-income ratio to ensure you can handle additional EMI payments. |
Ensuring that you meet these criteria increases your chances of approval and can also result in more favourable loan terms.
Suggested Read: Mortgage Loan Types in India
Documents Required for Home Improvement Loans
Here’s a table of documents required for a Home Improvement Loan:
Document Type | Details |
---|---|
KYC Documents | PAN Card, Aadhaar Card, Passport/Driving License/Voter ID, Address Proof |
Photographs | Passport-size photographs |
For Salaried Individuals | Salary slips (last 3–6 months), Form 16/ITR, Bank statements (6 months) |
For Self-employed | ITRs (last 2–3 years), P&L Statement, Balance Sheet, Business Proof, Bank Statements |
Property Documents | Title Deed, Approved Building Plan, Property Tax Receipts, Ownership Proof |
Renovation Estimate | Contractor/Architect’s quotation or cost estimate |
Loan Application | Filled and signed loan application form |
NOC (if applicable) | From housing society or apartment association |
Other (if applicable) | Existing home loan statements, Credit report |
Home Improvement Loan Options in India
When seeking to finance your renovations, you’ll find several options in the market. Here are the main types of loans available for home improvement:
1. Secured Home Improvement Loan
This type of loan requires you to pledge collateral, typically your home, to secure the loan. Because, it usually comes with lower interest rates and higher loan amounts.
2. Unsecured Home Improvement Loan
For smaller renovation projects, an unsecured loan may be more appropriate. While no collateral is required, the interest rates can be higher than secured loans.
3. Top-Up Loan on Home Loan
If you already have a home loan, you can opt for a top-up loan to fund your renovations. Because, this is often quicker and easier to process, with interest rates similar to your home loan.
4. Personal Loan for Home Improvement
A personal loan can also be used for home improvement purposes. However, it usually comes with higher interest rates compared to a dedicated home improvement loan.
Each loan option has its pros and cons, so it’s important to consider your financial situation and the scope of your project before choosing the right type of loan.
Suggested Read: Home Loan Balance Transfer
Home Improvement Loan Myths – Busted
Myth | Fact |
---|---|
Only homeowners can apply for a home improvement loan. | While property ownership is required, co-owners or joint applicants can also apply. |
Personal loans are the only option for financing home renovations. | Home improvement loans are specifically designed for renovations, while also offering better rates and terms than personal loans. |
Renovation loans have very short repayment terms. | You can choose flexible tenures ranging from 1 to 15 years, depending on your loan amount and eligibility. |
Suggested Read: Home Improvement Loan 101
I’m really glad I opted for a renovation loan instead of using my savings. The EMI fits perfectly into my monthly budget, and I even got a tax benefit on the interest. Thanks to the loan, I could finally build the balcony extension I always wanted.”
-Meera V, Bangalore
Why Choose a Home Improvement Loan Over Other Loan Types?
Usually, a home improvement loan is tailored for renovation and comes with several benefits over other types of financing:
- Lower Interest Rates: Compared to personal loans, the rates are significantly lower.
- Tax Benefits: You can claim deductions under Section 24(b) of the Income Tax Act for the interest paid on these loans.
- Flexible Repayment: You can choose a tenure that best fits your financial situation, thereby reducing the pressure on monthly expenses.
“Don’t treat a renovation as an expense—it’s an investment. A well-renovated home not only improves your living comfort but also adds long-term property value. Choose a home improvement loan with low processing charges and prepayment flexibility to keep your renovation cost-effective.”
– Sanjay Bharti, Home Loan Advisor at CreditDharma
Conclusion
A home improvement loan is a practical and smart way to enhance your living space without straining your finances. With low interest rates, easy eligibility, and tax benefits, it’s an ideal solution whether you’re planning minor repairs or a complete home makeover.
For more personalised advice and options, visit Credit Dharma to explore the best options available. Also ensure your renovations are stress-free with expert financial guidance.

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Frequently Asked Questions
A home improvement loan covers a range of renovation expenses, including structural repairs, painting, plumbing, electrical work, and also interior upgrades. It can also cover the cost of new fixtures, flooring, and other essential home enhancements.
Homeowners, co-owners, and also individuals with a stable income and a good credit score are eligible for home renovation loans. Also, banks typically accept salaried professionals, self-employed individuals, and pensioners, depending on their financial standing.
Yes, the interest paid on a home improvement loan is tax deductible under Section 24(b) of the Income Tax Act. You can claim deductions on the interest component, but not the principal amount.
Also, the maximum tenure for a home improvement loan typically ranges from 5 to 15 years. So, depending on the lender and the borrower’s eligibility.
The longest term for a home improvement loan is usually up to 15 years, though it varies by lender based on the loan amount, borrower profile, and repayment capacity.