Understanding the Difference Between Home Renovation Loan and Home Extension Loan

Most people regard home as more than just a house; it is where they feel at ease and secure, where fond memories are made and kept. Just as people grow, so do their requirements and tastes. Many property holders are thus forced to improve their house appearance by making simple repairs or by increasing its size to reduce distress; two types of financial facilities were invented: a home renovation loan and a home extension loan. Hence, each one should be analyzed and compared using the following criteria.

What is a Home Renovation Loan (Also Known as a Home Improvement Loan)?

We keep changing, so our preferences, fashions, and characters change too. This implies that we have to renovate our homes to look like the different faces we put on with every dawn. I am who I am because of my house; therefore, reconstructing it may turn out as an exciting idea on one hand but a financially taxing one on the other. That’s where a home renovation loan becomes useful. It is a type of loan that is borrowed to remodel, refurbish, or renovate a home. What this means is the fact that it is a personal loan for home renovation. It includes re-flooring houses, waterproofing them, and installing new plumbing fixtures, among other things involved in such works. Like other personal loans, eligibility determines the loan amount, and it can typically be repaid over a period ranging from 12 to 60 months.

What is a Home Extension Loan?

As time goes by, families increase in size, and people demand personal space to live comfortably, among other things. Instead of finding new homes to move into, which is difficult since it involves a lot of activities and is time-consuming, a person can decide to enlarge his or her current residence instead. What this means is that home extension credits offer monetary support for altering structures or expanding areas used for living purposes.

Key Differences: Home Renovation Loan vs. Home Extension Loan

1. Meaning:

  • A house makeover credit is acquired by a borrower who intends to improve his or her living premises. It mirrors the character of someone and increases convenience in his or her house.
  • A home extension loan is obtained to increase the usable area mainly due to a bigger family or any other spatial needs.

2. Rebuild:

  • A home renovation loan involves upgrades and improvements to the existing structure of the house.
  • A home extension loan typically involves building an entirely new section of the house rather than altering the existing structure.

3. Structural Changes:

  • Home renovation loans usually do not involve significant structural changes to the house; they focus on aesthetic improvements and repairs.
  • Home extension loans are specifically designed for structural changes, such as adding new rooms, constructing balconies, connecting two floors, and expanding living areas.

4. Personal Loan:

  • Home renovation loans often function as personal loans, allowing borrowers to use the funds for various purposes within the renovation scope, such as flooring, waterproofing, and ceiling repairs.
  • Home extension loans are intended exclusively for construction work aimed at extending the living space of the house.

Individuals may choose to take out a personal loan for home renovation in cases of minor expenses, such as cosmetic renovations. Personal loans typically require minimal documentation and offer a straightforward application process. To gain a better understanding of your finances, you can use a personal loan EMI calculator.


To embark on a journey to improve homes requires careful consideration and planning. To have a good experience, you must have all your documents, finances, and liabilities taken care of beforehand. A clean credit record could help save some cash through reduced interest rates paid for loans. Ultimately, we find comfort in making our houses cheerful places for them to live in. If you require home-improvement loans, Ruloans has made it easier for you to apply for home loan. Click the “Apply now” button on this page to get started.


1. Can I use a personal loan for home renovation or home extension?

  • Yes, personal loans can be used for both home renovation and home extension if the expenses are relatively minor, such as cosmetic improvements. These loans are versatile and require minimal documentation.

2. How can I calculate my EMI for a home renovation or home extension loan?

  • You can easily calculate your Equated Monthly Installment (EMI) using online EMI calculators provided by lenders. Simply input the loan amount, interest rate, and tenure to get an estimate of your monthly payment.

3. Are home renovation loans and home extension loans secured loans?

  • Home renovation loans are typically unsecured personal loans, while home extension loans may be secured or unsecured, depending on the lender’s terms and the specific project requirements.

4. What factors should I consider when choosing between a home renovation loan and a home extension loan?

  • Consider the scope of your project, your current financial situation, and whether you need structural changes. Home renovation loans are suitable for cosmetic upgrades, while home extension loans are designed for expanding living spaces.

5. How does a good credit score impact my eligibility for these loans?

  • A good credit score can enhance your eligibility and improve the terms and interest rates offered to you. Lenders often prefer borrowers with a strong credit history.

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