Just building a house is not enough; as the family grows, the urgency to get some more space increases. The cost of house building material is on rising and for this reason, the banks have come up with a new loan type- a loan for home extension which is different from your regular home loan.
What Does It Cover?
A loan for home extension is a flexible way to get additional funds. It can be used to
- Add a room or floor to the existing house.
- Improve the interiors of the existing house.
- Renovation, repair or refurbishment of the existing property.
Who Can Apply?
The loan application eligibility criteria include the following prerequisites.
- Age at the time of loan maturity; between 21 to 58 years.
- Age of property at the time of loan maturity.
- Steady income or latest 2 years job experience.
- Repayment scheme chosen by the loan applicant.
- Apply individually or jointly. Family members can be a part of the loan as co-applicants.
- If the house is jointly owned by 2 or more family members, all of them must be the co- applicants for the loan.
Also Read: Best Tips to Make Your Home Loan Cheaper!
Benefits of Loan for Home Extension
This kind of loan comes with the following benefits:
- Tax Benefits: Every year the repaid principal amount of loan is exempted from tax; the upper limit is Rs1.5 lakhs under section 80C of the Income Tax Act, 1961. The interest paid is also eligible for tax deduction under section 24 (b) with a limit of Rs. 2 lakhs.
- Flexible Repayment: The borrower can choose to repay the loan in EMIs (Easy Monthly Installments).
- Flexible Loan Amount: The loan applicant can choose between 75% and 90% of the total construction/ renovation amount.
- Flexible Loan Tenure: Borrowers can take the loan for home extension for as long as 20 years. The loan span is minimum 12 months.
- Low Rates of Interest: The home extension loan has the same interest as the housing loan rates. Borrowers have the option to choose fixed or floating interest rates.
- Quick and Simple Processing: Banks do not take much time in approving home extension loans. It becomes even more easy to get this loan if the housing loan is taken from the same bank.
What Documents are Needed?
This loan is available against the security of an existing house. Minimal documentation is required for applying for home extension loan. Some mandatory documents required are
- Proof of income
- Proof of identity
- Proof of residency
- Proof of employment
- Applicant photograph
- Processing fees cheque
- Estimate of construction
- Approved house plan copy
- Bank statement for latest 6 months
- Title deed and encumbrance certificate of the property
So, there’s no more time to think about changing your house or apartment when facing space crunch! Simply opt for a loan for home extension and create some more space for a breather!