Your home should reflect your personality. With so many new trends and designs available now, you can upgrade the aesthetics of your home without hassles.

If you are a homeowner and don’t have enough equity to get a home loan, then a home renovation loan is the perfect pick to finance your home improvement projects.

A home renovation loan is a special type of construction loan that provides borrowers with low-interest funds for renovations or repairs.

However, this loan is still unknown to many people.

Keep reading this article to know everything you need to keep in mind before applying for a home renovation loan.

What is Home Renovation Loan?

Home renovation is the process of renovating or making additions to one’s home. It can consist of projects that recondition an existing home interior, exterior, or other improvements to the property.

Renovations can be expensive and can refrain you from improving your home, a reason why intelligent people turn to home renovation loans. A home renovation loan can be a great option to finance your home renovation.

Home renovation loans are the only loans that credit homeowners for a home’s future value.

These loans use a home’s approximated after-renovation value instead of its current value to calculate the amount of money the homeowner can borrow. Reputed lenders like PNB Housing Finance offer industry-best rates of interest on construction loans.

What Are The Benefits of a Home Renovation Loan?

The following are the significant advantages of availing of a home renovation loan:

1. Saves Money –
A home renovation loan saves you from withdrawing money from your savings account. It also saves you from the hassle of applying for a high-interest loan, such as a personal loan.

Hence, a home renovation loan offers you easy money, and you can conveniently repay the principal and interest over an extended tenure.

2. Long Repayment Tenure –
Construction loan repayment tenure usually ranges between 20 and 30 years. Hence, the EMI will never burden your finances.

3. Low Rates of Interest –
The interest rates of home renovation loans generally start from 7.50% and go up to 10%. The effective rate depends on the borrower’s eligibility, including the credit score, age, property value, etc.

4. Minimal Documentation –
You need to submit no more than seven to eight documents to avail of a construction loan. Moreover, most lenders offer the facility of online document uploading, meaning you can apply for the loan from the convenience of your home.

Home Improvement Loan – The Mechanism

A home improvement loan is a feature-rich construction loan that is easy to understand. The best thing about these loans is that it considers the after-renovation value of the home while considering the loan amount.

Here is how these loans work.

1. You visit the lender’s branch or website and express your interest to avail of a home renovation loan.

2. The lender provides you with the application form. You need to fill the application form and attach documents like photographs, PAN Card, Aadhar Card, income proof, bank account statement, property documents, etc., and submit online or offline.

3. The lender sends an evaluator who inspects your property and calculates the after-renovation home value.

4. The evaluator notes their observation and sends the application back to the lender.

5. A lender-appointed loan officer verifies your loan application and approves the loan amount. The loan amount depends on your eligibility and after-renovation home value.

6. The lender hands over the loan agreement, which contains every detail about the loan, including loan term, interest rate, etc.


A home renovation loan saves you from the trouble of emptying your savings account for home renovation.

These low-interest loans offer incredible flexibility and extra-long repayment tenure. However, choosing the right lender often makes all the difference.

Spend some time reading and analyzing the loan terms of different lenders before finalizing the best one.

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