Does your home need renovation? Do you want to re-plan, re-design or re-construct your house? Well, don’t worry. You can avail a home renovation loan. And you can get this loan even when you do not have a good credit score.
Home Renovation Loan
You can avail a personal loan for home improvement from a bank as well as from an NBFC. It is a secured loan where your home is the collateral, and the loan amount depends upon your need and credibility. A good credit score makes you eligible for a higher loan amount at a lower interest rate for a longer tenure. With a poor credit score, you can get a loan at a higher interest rate, for a shorter tenure and higher EMI.
To make the situation more favourable and less disheartening, follow some of the tips mentioned below while applying for the loan:
Tips to Considered Before Availing Home Renovation Loan:
- Repair your credit score
It is a significant and useful way to increase your eligibility to avail a home renovation loan. You can get a copy of your credit report once a year which has details about your credit history. Screen out the default or late payment issues and resolve it. Timely payment of your dues improves the credit score dramatically.
- Lower the FOIR, the better
FOIR stands for Fixed Obligations to Income Ratio. It is the ratio of your total payout liabilities as EMI, including the EMI of the loan in processing, to your total monthly income. The lender considers this to decide the loan amount. If you keep your FOIR lower, you can expect a higher loan amount from the lender.
- Get a co-applicant
Your family member or friend with a good credit score or less financial liabilities on his/her name can be a co-applicant in your loan application. It ensures lenders about your credibility and can sanction your loan at lower interest rates.
- Include a guarantor
A guarantor is someone with a good reputation and financial status which is ready to vouch for you and guarantee the timely repayment of the loan EMI. It makes your loan application strong and worthy of the outstanding loan amount.
- Explore alternative funding options – Personal loan and Micro-lending
There are some excellent alternatives funding tools which you can select in case of a rejection of your home renovation loan by the lenders.
- A personal loan is an excellent option as it has instant approval and quick disbursement mechanism, least documentation, online application and sanction, comparative lower interest rate, flexible tenure and repayment mode, and right loan amount. An instant personal loan has all the process online, starting from application to disbursement. A good credit score is a must for a personal loan, but you can still avail it with a poor credit score at a higher interest rate. The best part of a personal loan is that you can spend the loan amount on anything you wish, without any restrictions from the lenders.
- Micro-lending is the funds raised by borrowing from peers or family and friends. They are not going to ask for your credit score before lending you the money. It is your relation and goodwill that fetches you the funds for home renovation.
Many funding options are available for the renovation of your home. But before applying must check the cibil score required for personal loan. Even with a poor credit score. Make a thorough study of these options and select the one that best suits your needs and for which you are most eligible. Once you get the funds, renovate your home and live happily.