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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 / BenefitDetails
Interest RatesStarts 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 TenureUp to 15 years for comfortable EMIs
Collateral RequirementUsually requires mortgaging the home being renovated
Tax BenefitsInterest up to ₹30,000 deductible under Section 24(b) of the Income Tax Act
Usage FlexibilityFunds can be used for flooring, kitchen, painting, tiling, waterproofing
Quick ProcessingApproval in 3–7 working days; faster for existing home loan customers
Disbursal ModeLump sum or phased release based on renovation progress
Preserves SavingsNo need to tap into emergency or long-term savings
Increases Property ValueRenovation 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:

LenderApprox. 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. onwardsUp to 15 years
Note: Actual rates may vary based on credit score, loan amount, and profile.

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 TypeTypical 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 ChargesSalaried (floating rate): Usually NilOthers: 2%–4% on prepaid amount
Foreclosure Charges0% – 4% (depends on loan type and lender)
Late Payment Penalty2% – 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)
Note: Charges may vary by lender. Always check the loan sanction letter and schedule of charges before proceeding.

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 CriteriaRequirement
AgeMinimum Age: 18 years
Maximum Age: 65 years
Resident TypeIndian
Employment StatusSalaried
Self- employed
ResidencePermanent Residence
Or a rented residence where the applicant has resided for at least 12 months before applying.
Credit ScoreA good credit score of at least 700 or more issued by a recognised credit bureau
Existing DebtsIf 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 TypeDetails
KYC DocumentsPAN Card, Aadhaar Card, Passport/Driving License/Voter ID, Address Proof
PhotographsPassport-size photographs
For Salaried IndividualsSalary slips (last 3–6 months), Form 16/ITR, Bank statements (6 months)
For Self-employedITRs (last 2–3 years), P&L Statement, Balance Sheet, Business Proof, Bank Statements
Property DocumentsTitle Deed, Approved Building Plan, Property Tax Receipts, Ownership Proof
Renovation EstimateContractor/Architect’s quotation or cost estimate
Loan ApplicationFilled 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

MythFact
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.

Renovating Your Home? Get the Best Home Improvement Loan Offers with Credit Dharma

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Frequently Asked Questions

What is covered in a home improvement loan?

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.

Who is eligible for a home renovation loan?

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.

Can a home improvement loan be tax deductible?

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.

What is the maximum tenure of a home improvement loan?

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.

What is the longest term for a home improvement loan?

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.

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