A home extension loan can fund your home renovation. Here is how to get one

Worried about how to fund a simple home renovation? Well, we got news for you

As your family grows, you may find that you need more space to live comfortably. You might consider moving into a larger home to accommodate such requirements. Buying a new property is not always a viable solution because it entails a lot of formalities. Also, getting a lump-sum amount after a point in life is not always achievable. As a result, people's gazes are often drawn to the idea of a home extension.

Though we need a sizeable amount of money for home extensions, it is usually less than the capital required for purchasing a new home. To cover the expansion costs, you can apply for a home extension loan (which is different from a home loan extension or a moratorium).

What are home extension loans?

Banks grant home extension loans to individuals who need money to restore or upgrade their homes. These loans can help improve the appearance of your home while also helping owners add more space to live in.

Home extension loans, often known as home improvement loans, can be used for activities such as flooring, tiling, plastering, and painting the area of your home you are extending. The paperwork process for obtaining a loan for a house extension is straightforward and painless. The interest rates are comparable to those for home loans.

It is imperative to note that Home Extension Loans only include civil work like changes in structure, additional construction of floors or ground area, changes in internal walls, tiles, plastering etc. Loan disbursal will be a refinance once the evaluator certifies that this extent of work has been completed. Funding for woodwork, furniture (fixed or otherwise), bathroom fittings, electronic items, electrical work, among others is not included here and is to be treated under existing customer top up norms. 

Eligibility criteria to get a home extension loan

Anyone can apply for home extension loans as long as they can pay back the loan and have a good credit score.

Home extension loan interest rates

Home extension loan interest rates are quite comparable to home loan interest rates. However, the individual’s age, revenue source, income, and other criteria, all play a part in establishing the interest rate.

So, if you want to construct a room or a storey to your home to fit your expanded family, and if you don’t have any other financial means, you can take out a home extension loan with the convenience of repaying it till your home loan expires.

Home extension loan term

Home extension loans usually have a 20-year repayment period. However, the applicant’s age, the length of the outstanding home loan, and other factors may influence the duration of the loan granted by the bank.

Features of a home extension loan

Some of the key characteristics and advantages of Home Extension Loans are listed below:

• Appealing interest rates
• Tax advantages 
• A high loan-to-value ratio of approximately 100% of the extension valuation or 90% of the value of the property, whichever is lesser.
• A 20-year term.
• A balance transfer facility offered by most of the leading providers
• Documentation that is basic and easy to understand

Documents required to apply for a home extension loan

The paperwork needed to apply for Home Extension Loans is listed below:

• Completed application form
• Proof of age
• Proof of income/Bank Statement
• Proof of residence
• Documents related to the property
• The approximate budget of the extension

A home extension loan can be a good option if you require space, and the cost of a new home exceeds your budget. Although, if buying a new home is possible, do consider it strongly. IDFC FIRST Bank offers you home loan interest rates starting at 6.5%. With such interest rates, you do not need to limit yourself to extending your home. You can invest in a new property. You can get your loan in no time with our instant loan app and keep track of your payment using our mobile banking app. So, wait no more! Get your home loan from IDFC FIRST Bank today.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.