Planning on home improvement? It will cost plenty of money, so you must plan and budget it. There are financial tools you can use to get the job done.
A Home Improvement Loan can be taken to upgrade, renovate, refurbish and decorate. This secure loan can be taken against the mortgage of a property. The benefits include longer tenures, attractive interest rates, and little documentation.
However, a home improvement loan will bring additional financial commitments in the form of monthly installments. So, it calls for a frank assessment of your need for home improvement. You should not seek more credit than you need.
Here is the Six Steps to Get a Home Improvement Loan
The procedure for a home loan is not much different from that of a home loan. And it starts with filling up and submitting the application. Here are the six easy steps to securing a home improvement loan:
Complete the Form
The process starts with filling out the application form. You can do it physically, or you have the option of applying online. The applicant has to furnish name, age, address proof, mobile number, income proof, and proof of educational qualifications.
As you need to support your claims in the application form with documents, make sure the details you fill in the application form are the same as in your documents.
Verifying the Documents
The second step is to verify age, income proof, and address proof documents. You will have to submit all the documents correctly to get a home improvement loan. The entire process may take two to four days.
Sometimes, the lender does the verification. The lender will likely invite the applicant for a ‘face-to-face’ meeting to learn more about them. It may be to check if they have the financial capacity to repay the loan at the housing loan interest rate being agreed upon.
The lender will not approve without a background check. That’s an investigation into your financial history, especially with money loaned to you: Have you been above board regarding repaying loans? Does your credit score match the lender’s expectations?
With this background check, the bank confirms whether the details provided in the documents match reality; information such as a home address, workplace address, phone numbers, etc.
Pay the Processing Fees
If everything is fine up to this state, now is the time for you to pay the processing fee and take your application to the next level.
The lender confirms that your home improvement loan application has been accepted by asking you to pay the processing fee. This is an amount that officially kicks into motion the loan processing per se.
That said, the lender still hasn’t confirmed the home improvement loan in your name.
Securing the Loan Approval
This is when the lender has decided for or against approving the loan. This is the culmination for which the applicant has been waiting all along.
At this point, the applicant learns about the loan amount sanctioned for him, the housing loan interest rate, the tenure, etc. The applicant then receives an approval letter to seal the home improvement loan.
Property Inspection and Documents Verification
The lender appropriates all the original documents of the collateral property. These documents remain with the lender till the loan is repaid in full. The property documents are thoroughly verified.
The lender will send a representative to inspect and report physically. After a satisfactory report on every aspect of the property and its ownership, the home improvement loan will be disbursed.
Documents Required for Home Improvement Loan
Here is the complete list of Home Loan documents required for applying for a Home Improvement Loan.
- Completed Home Loan Application Form
- Passport size photographs
- Proof of Identification
- Age Proof
- Residence Proof
- Income Documents
- Property Documents
- Bank Account Statements
- Proof of Business (for Self-Employed)
The home improvement loan applicant should ensure necessary documents are ready and available before applying for the loan. And that includes bank account statements and proof of business for the self-employed.
From an investor’s point of view, the housing loan interest rate is one of the key considerations. But the borrower’s ability to pay back the loan comfortably is the most important thing for the lender.