Type of Home Renovation Loans Options in India 2024

Home Renovation Loans


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Last updated on 12th April 2024

Buying a home is a major investment. Once you have made this commitment, keeping it in the best condition becomes essential to preserving its value. But renovating a home can be a daunting task for homeowners who are on a limited budget. Luckily, there are various types of home renovation loans available in India to help make this process simpler and more affordable.

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Whether you’re looking to make some minor upgrades or significant improvements, we have got you covered. 

Top 4 Home Renovation Loan Options for 2024

1. Home Improvement Loans

This is one of the most popular types of home renovation loans in India and can be used for anything from electrical work to installing a new kitchen. Home improvement financing is a loan designed to specifically cover home renovation projects. Furthermore, these are secured loans and are usually offered at an attractive rate from banks and NBFCs and can be used to pay for repairs, redecorating, and other renovations. 
The loan size ranges from Rs. 50000 to Rs. 10 crores, depending on the value of the property being renovated. The repayment period can be up to 30 years; it varies from lender to lender. Additionally, borrowers may be required to pay an upfront processing fee of 0.5-1%. 

Key features of home improvement loans are: 

- Minimal documentation and quick processing
- Easy repayment process with flexible tenures 
- Lower processing fees 
- Lower interest rate for housing loans for renovation

2. Top-Up Loan

A top-up loan is an additional facility offered by a financial institution over and above the existing home loan amount. These types of home loans are usually attached to a borrower’s home loan and allow the owner to receive an additional loan amount at a lower rate of interest. This is a great way to finance small home renovations and repairs. When a loan for home improvements is not sufficient to meet the needs of a homeowner, they may choose this option. A certain fraction or percentage of their existing loan’s principal amount can be availed as a ‘top-up’. 

Key features of top-up loans are:

- Lower rate of interest compared to regular personal loans
- The repayment schedule gets extended when additional payments are made 
- No security or collateral is required
- No restrictions on the use of the loan amount

3. Personal Loan for Home Renovation

A personal loan for home renovation can be a way to finance your project. This loan can be taken out against your credit history and can cover any home renovation costs. Generally, these loans are granted for the borrower’s personal use, and s/he is free to use the loan for any purpose, including home improvements. However, personal loans are usually granted for a much higher rate of interest than other types of loans, since they are unsecured and pose a higher risk for the lending institution.

Key features of personal loan for home renovation are:

- Swift approval and disbursal
- No security or collateral is required
- No limitations on the amount of loan 
- Flexible payment options

Suggested read: Best housing loans in India

4. Credit Card 

A credit card might be the way to go if your home improvement project is relatively small. Credit cards offer generous purchase protection and rewards, and can help you keep track of your spending. Also, several banks issue credit cards which can be used to finance expenditures on home improvement or renovation activities. However, the credit card limit serves as the limit to spending- essentially the maximum loan amount. Therefore, this option should only be used as a last resort as interest rates on credit cards can be extremely high. 

Key features of credit cards for home renovations are: 

- Quick access to funds 
- No security or collateral is required
- Flexible payment options 
- Increased buying power

Suggested read: How is home loan eligibility calculated in India

Which Home Renovation Loan is Right for You?

The type of home renovation loan that will be right for you will depend on your requirements, credit history, and repayment capacity. The above four have different advantages and disadvantages. Generally speaking, home improvement loans offer the best rates and terms. These loans allow you to borrow a lump sum amount and pay it back over a fixed period, meaning that you will always know exactly what you owe and how much you need to budget for your repayments. Top-up amounts on a home loan are similar to home improvement loans but are usually offered by banks and NBFCs at competitive rates. Personal Loans for home renovation are usually more expensive but may provide you with more flexibility over the loan period. They can also be used for a wider range of works, making them useful if you are looking to do a more extensive renovation. Credit cards are convenient and generally easier to access but can be more expensive in the long run as interest rates are higher than the above loan types. Whichever type of home renovation loan you choose to finance, you should always take the time to read the terms and conditions before signing the agreement. This will ensure that you can make an informed decision as per the scenario.


To conclude, as a homeowner, it is essential to consider all the available options when it comes to financing your home renovation project. All are viable options that can help to make your project more feasible and affordable. Understanding their unique advantages and disadvantages is crucial to making a comprehensive decision.

Published on 15th June 2023