Expand your home with a home expansion loan

Home additions such as kitchen expansions and additional bedrooms or even an additional floor all add square footage and value to a home. Expansion includes alteration in the current structure of the residence to add extra space such as constructing a new room, a floor, a bigger bathroom or enclosing a balcony. All this expansion can make your house more liveable and enhance the value of your home. Funding this extension can put a hole in your pocket as contractor fees, labor costs and materials and supplies comes at a price, but with a home loan to cover the expenses; home expansion becomes easy on your pocket.

Though many banks provide loans for these purposes as part of home expansion loans, some banks give loans for the same purposes as part of their home improvement loans.

House improvement loans include addition of extra bedrooms, living rooms, bigger bathrooms or new flooring or some space for balcony. It is nothing but the alteration in the structure of the house.

Who all can apply for this?

You can apply individually or jointly for Home Extension Loans. All owners of the property will have to be co-applicants. However, all co-applicants need not be co-owners. Generally co-applicants are close family members.

The Home expansion Loan amount is determined taking into various account factors such as:

• Repayment capacity
• Age
• Educational qualifications
• Stability and continuity of income
• Number of dependents
• Co-applicant’s income
• Assets
• Liabilities
• Saving habits, and more

Loan Term

You may spread out your payments for the loan over a maximum term of 20 years.

The tenure of the loan is also dependent on the customer’s profile, age of customer at maturity of loan, age of property at loan maturity, depending upon the specific repayment scheme as may be opted.

Amount of loan granted

Generally 70 – 85 percent of the amount required for the extension or expansion is sanctioned as loan by the banks. Your age, repayment capacity, credit worthiness, time of loan, tenure of loan, credit history etc all form a part of factors that may affect the amount of loan that gets sanctioned. The interest rates may be floating or fixed. Processing fees up to 1-2 percent may also be charged for the purpose.

Documents Required By Banks in Case of Self Employed or Businessman

Identity Proof
Residence Proof
Photograph
Income Statement of last 3 years
Balance Sheet of last 3 years
Educational Qualification
Proof of Existence of Business and Business Profile
Income Tax Return of last 3 year

Documents Required By Banks in Case of Salaried Applicants

Identity Proof
Address Proof
Photograph
Bank Statement of last 6 months
Form 16
Latest Salary Slip

Checklist before opting for home extension loan:

Calculate your EMI to understand how it will affect your monthly budget
Understand your home loan eligibility before you apply for a loan
Compare the interest rates of various financial institutions
Evaluate the total loan cost (processing fee + service charges + total interest outflow) you would pay for each offer and zero in on the offer that gives you the least total interest outflow.