We come across many Home owners who plan & wait for 3-4 years to get their homes renovated. The main reason to delay is that they save for next 3-4 years. And this will help them have more funds to the renovation ?

Expert : Well today you have amazingly unbelievable flexibility in Home Loans and also Home Improvements Loans. Let’s look at Home Loan first. When you buy new homes you have various possibilities. Like for some the Emi starts at the time of possession, few buy houses under construction who have their down payments going on until the time of possession where you actually start paying your EMI’s.

Let say your loan has been approved and all the procedures are cleared with Bank –A . And you have paid your 12 EMI’s. And this bank is charging you XXX- amount (XXX is just an assumption). So you are paying 12 EMI’s i.e. a period of 1 year to Bank-A.

Now within this 1 year you will definitely see property appreciation. You can then i.e. after 12th EMI, you can approach Bank- B to transfer your principal outstanding. The Bank – B will look into the current valuation of your property, and give you the personal loan.

Principal Amount (minus) Current Valuation of Property (equal to) Delta (equal to) Personal Loan

The personal Loan given by Bank–B here is at a lower interest than a standard personal loan. So we suggest that home owners waiting for 3-4 years, need not do so. Home owners can start with Home Loan or Home Improvement Loan and procedure in a years’ time.

Let’s say you transfer Home Loans and you transfer it for 20 years tenure. For first 4 years, you have an option to only pay the interest as an EMI. Say you have taken a loan of 50 lakh with 8.4% interest rate. Monthly your EMI will go down by 12,000/- to 15,000/- .

Assuming your income will also increase with time. So the other Impact of such options is, now you can think of buying a house worth of 70 lakhs instead of 50 lakhs.