What factors affect the interest rate on a home renovation loan?

The interest rate on a home renovation loan depends on several factors related to the borrower's financial profile and current market conditions.

Key factors that impact interest rates are the loan provider’s Marginal Cost of Funds Lending Rate (MCLR), your credit score and income stability, the loan amount, the loan-to-value ratio, the job profile, the location of the property, the type of interest rate chosen (fixed, floating, or mixed), the banking relationship, and the loan tenure.

Borrowers with higher credit scores, stable salaried incomes, moderate loan amounts, lower LTV ratios, and existing banking relationships are more likely to get lower interest rates. Loans for properties in prime locations and loans with shorter tenures also attract lower rates.

Understanding how these diverse factors influence interest rates can help you present an attractive borrower profile to financial institutions."