Home does not simply mean a place you reside in. It is reflective of your choices and persona. While a few changes here and there can certainly give a place character, buying and renovating a home does require a lot of money. And most people just don’t have that kind of cash lying around, ready. There’s an easy solution to this, you can supplement your monetary requirements for purchasing and making changes to your home with a loan. These loans are known as Home Loans or Home Improvement Loans, and they can take you one step closer to owning a place to call home or redoing your current one to better reflect who you are. Remember that before applying for one, you need to check the eligibility criteria and documents required for a Home Loan.
Financial institutions give these loans for purchasing, remodeling, refurnishing, and restructuring your home.
Types of Loans for Home Improvement
You can take two types of loans to buy and renovate your home. Depending on the criteria you fulfill, look for the loan that best fits your requirements.
- Secured Loan
A secured Home Improvement Loan is when you are offered a loan at a lower interest rate, but the property you’re looking to buy or renovate is mortgaged against the loan amount.
If you are unwilling to pay higher interest rates, this loan would be the right choice for you.
- Unsecured Loan
An unsecured Home Improvement Loan does not take your home in the mortgage but comes at a higher interest rate. As the risk for lenders is high, they charge a higher interest rate from the borrower.
If you want to avoid mortgaging your property, this loan is the one for you.
Let us jump in to see the documents required for a Home Loan.
Documents Required for a Home Loan
To get your Home Loan approved in one go, here are some documentation proofs you must provide to fulfill the eligibility criteria. Let us check the documents needed for a Home Loan:
- Duly filled application form
- Identity proof includes PAN Card, Aadhar Card, Voter ID, and Driving License
- Income proof in the form of salary slips for the last three months.
- Employment proof in that employment letter or previous salary slips.
- Residence proof includes a passport, ration card, or Aadhar card.
- Bank statement for the last six months
- Passport-size photographs
- Processing fee cheque
- The title deed of the home that requires remodeling
- Title clear certificate
- Architect/engineer’s estimate for the improvement needed
The documentation required for Home Loans varies depending on the financial institution. Only after the successful provision of these documents and their verification will your Home Improvement Loan be considered.
Tips to Keep in Mind When Applying for a Home Loan
Fulfilling the eligibility criteria is the mandate. So the quicker you get credible with the documents, the easier your process will become. However, over and above this, there are certain tips for getting your Home Loan approved. Let’s check them out:
- Before applying for a loan, make sure your credit score is high. A high credit score reflects high credibility like nothing else when it comes to applying for loans. If nothing, this score will help you sit higher while negotiating interest rates.
- Make sure your bank account is updated with a minimum balance. Lending institutions check your bank account statements, and not maintaining the minimum balance over previous months shows less credibility on your end.
- If you’re not too strong in terms of credit score or income, you can make your approval quicker if you file for a Joint Loan aka with a co-applicant. However, some lenders require homeowners to be joint owners of the home they are applying for.
- Maintain a good credit report and see there are no discrepancies in it. Keep your documents error-free.
Getting a Home or Home Improvement Loan will bring you closer to your home goals. Get all the documents required for a Home Loan and follow the above-mentioned tips. It will create a lasting and credible impression on the lending institutions. Furthermore, ensure you know the loan specifications and negotiate the terms and conditions that are more attuned to fit your requirements better.