Home renovations during festive seasons are a prudent financial decision, still the choice of loan can go a long way in determining whether it is a smart move or a costly mistake. In such cases, personal loans provide fast availability of funds without collateral. Still, their higher interest rates and shorter repayment periods make them more expensive and difficult to manage over time.
Understanding personal loans for renovation
Personal loans in the nation currently carry lucrative interest rates starting from around 9.99% per annum. These rates come with varying terms and conditions based on credit scores, repayment history, and overall credit profile of the borrower, along with the loan disbursing rules of lending institutions.
These loans provide quick approvals and generally require minimal documentation, making them attractive for urgent reconstruction and renovation plans. Still, it is important to keep in mind that the shorter repayment tenure, typically 1 to 7 years, means higher monthly EMI payments and total interest payouts.
Latest personal loan interest rates 2025
| Bank | Interest rate (p.a.) | Tenure |
|---|---|---|
| HDFC Bank | 10.50% – 24.00% | 1 – 6 years |
| ICICI Bank | 10.80% – 16.00% | 1 – 6 years |
| Kotak Bank | 10.99% onwards | 1 – 5 years |
| State Bank of India | 11.15% – 14.30% | Up to 6 years |
| Axis Bank | 10.49% – 22.00% | 1 – 5 years |
Note: These rates are illustrative and subject to change. Always check the bank’s official website for updated information.
Top-up home loan vs personal loan: Which is better for renovation?
Given that personal loans continue to remain popular choices for quick, collateral-free festive renovations. Still, they are not always the most cost-efficient option. In cases where homeowners are already servicing a home loan, a top-up loan often emerges as a smarter alternative, providing lower interest rates and longer payment tenures.
Understanding this simple difference can help sensible borrowers avoid unnecessary financial complications and select a borrowing option that best matches their home renovation needs and long-term financial goals based on their repayment potential.
Top-up home loans are aligned with the original home loan period and provide longer tenures aligned with the home loan’s remaining period. They also come with tax benefits under Section 24(b) of the Income Tax Act.
Key factors before taking a festive season loan
- Personal loans provide collateral-free, quick funds, but come with higher interest costs.
- Top-up loans offer lower interest rates and longer repayment terms.
- Existing home loan borrowers can leverage top-ups for festive renovations.
- Tax benefits are available only with home and top-up loans, not with personal loans.
- Careful budgeting can avoid financial problems from higher EMIs.
- Always prudent to discuss the home renovation budget with a certified financial advisor.
Expert advice on choosing the right loan
Atul Monga, CEO & Co-Founder, BASIC Home Loan, says, “While personal loans provide quicker access to funds without collateral requirement, they come with a higher interest rate and comparatively shorter repayment tenure. If you have an existing home loan and a good repayment history, opting for a top-up loan can reduce your overall borrowing cost. On the other hand, personal loans can be a good option for those who need quick, collateral-free loans despite higher interest outgo.”
In short, choose a personal loan for small, urgent festive renovations. But if you already have a home loan and need bigger funds, a top-up loan will likely save you money in the long run.
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