Just like any other valuable asset in life, a home also requires regular care, upgrades, and maintenance. Repainting the walls, replacing the flooring, or adding a ceiling pattern to the design are some nice ways to revamp the house every few years. Sometimes, these enhancements might require adding a new room or bathroom, refurbishing the interiors, making a home office, or expanding the balcony to accommodate the family’s growing needs. However, such endeavors come with heavy price tags that may be too significant to meet in one go. This is where home improvement loans or top-up loans can be used to help cover the expenses.
These loan options are ideal for homeowners who need funds for home repair and renovation. But which funding option is more suitable for them? Let’s find out.
Things to Know About Home Improvement Loans
Several financial institutions offer secured home improvement loans to cover the expenses of home renovations and repairs. These loans can cover the costs of all renovation-related projects, including repairs, expansions, structural changes, interior upgrades, etc. Whether the homeowners want to repaint the walls, change bathroom tiles, or change the living room interiors, anyone with a stable income can source a home improvement loan to give their house a makeover.
Quick approval makes these loans a favorite funding option among homeowners. Eligible applicants can fill out a home loan application form and submit their documents online before getting the funds directly into their bank account. Borrowers can opt to get full disbursal in a lump sum or in installments as the need arises. Flexible repayment tenures of up to 15 years make the repayment convenient for borrowers.
Things to Know About Top-Up Loans
Existing housing loan customers can opt for a top-up loan from their lending institution if they need additional funds for home renovation during their Home Loan tenure. However, the borrower must have a clear repayment record to obtain a top-up loan. Since the loan company already has the borrower’s details and documents, they can quickly process the top-up without any unnecessary formalities, hassles or delays.
Interest rates will be reasonably applied according to the borrower’s credit record, and will be on par with the current Home Loan interest rate. Regarding repayment, the borrower gets the remaining Home Loan tenure to repay their top-up loan too. Therefore, a top-up loan is an excellent option to get additional funds on a Home Loan to conduct the required home repairs or renovation. However, before applying, read the fine print in the loan agreement carefully.
Which Funding Option is Better for Home Improvement?
Both loan products are similar. So, deciding between the two depends on multiple factors, including the following:
- Maximum loan amount being offered
- The interest rate applicable to the loan application
- Repayment tenure and EMI affordability
- Processing charges against the application
A loan seeker can select the better option after analyzing these factors. For instance, top-up loans have no end-use restrictions, making them an ideal choice for any expense. However, if the homeowner only needs money for home repair or renovation, home improvement loans are the better choice.
When it comes to comparing both loan options, here are a few compelling reasons that let top-up loans score over home improvement loans.
- Interest rates on top-up loans are more reasonable
- Getting a top-up loan is easier because the applicant already has an existing Home Loan with the loan company
- Those who maintain a good service record can get an ample amount at the same interest rates
- Top-up loans require simpler paperwork
Since the lending institution already knows the borrower’s credit habits and repayment capacity, they do not conduct the credit calculations all over again. However, tax deductions are available on both home improvement and top-up loans.
When it boils down to deciding between a top-up loan and a home improvement loan, compare both options based on their housing loan interest rates and opt for one that comes at a lower cost. While top-up loans are easier to obtain, home improvement loans offer larger loan amounts without adding to the Home Loan burden. Top-up loans are the most accessible funding choice during the Home Loan balance transfer process. However, if you still need to decide, compare the loan schemes and make the best financial decision after research and comparison.
