Contractorbhai : What are Interest rates for various loans options to fund Home Improvement?
Loan Expert : Home Improvement Loan now comes inform of Personal Loan. The Interest Rate varies with nature of work.
Interest Rate for Home Improvement Loan for Salaried Individual ranges from 12.55 – 15.5%. For SME segment (small & Medium Business owners) the interest rate ranges from 17%-25%.
For Balance Top-up plan, the home owner needs to have paid off 12 EMI’s with previous bank. Only then he can avail for BT (balance transfer) top-up plan.
Contractorbhai : Has the Interest Rate cut down then past for Home Improvement Loan?
Loan Expert : The Interest Rate for Home Loan has been cut down. Because Home Loan is a very much secured Loan. Why? Because if the bank finds any default with payment of EMI or something, bank will sell the property of the client and regain its cash. That’s why the interest rate have been cut.
In year 2016, The base Interest Rate that SBI bank was charging 9.05% – 16%. And today the same bank has come down to 8.35%.
How do you get Home Loan?
Home Loan is given as per Home Agreement Value. Whereas for Home Improvement Loan, Home Agreement Value plays no role.
Home Improvement Loan as is said earlier, acts as Personal Loan. The Interest Rate of Which has always been flat 12%-15%. But you see amazing flexibility for Loans today. Like a home owner can pick for Balance Transfer (BT) top-up plan or LAP (Loan-Against-Property). And this can be used for Home Improvement at a lower Interest than personal Loan. The Interest Rate for Personal Loan is 12%-12.5% whereas for (BT) top-up plan or LAP Interest Rate will Range from 10%-11%.
Let me explain this with an example, Let’s say a person many loan running at the same time. He decides to cut his cost. SO here he opt for Balance Trasnfer Loan or LAP
The cost for BT top-top plan usually ranges from 10 lacs to 30 lacs (if the house is huge say of 2-3 crore).
Not let’s say for 3 main cities i.e. Mumbai, Pune and Delhi, the average cost of house is 40 lacs. Here the cost for LAP ranges from 20-60 lacs which could go upto 1 crore too depending on property. The home owners can close the loan running with higher interest, and consume the surplus fund for Home Improvement.
So here home owners can get the work done and save on excess interests that he would be paying otherwise.