A home improvement loan is offered to facilitate improvement of a self-owned property to existing or new customers. This loan may be used for repairs, renovations, improvement, and extension of the house. The loan works like this: The borrower will have to work out a cost estimate of the work intended to be done and give it to the lender, who will take a quotation from the contractor to verify the estimate submitted. The money is released at the rate of the construction work to the contractor to whom it is due.
Some banks also offer a 'top up loan' that can be availed time and again for various personal requirement based on the property value. It offers the customer additional funds against the security of the same property. To avail top up loan, the vintage of at least six months is required for the loan availed. The end use of top up loans can be furnishing of home, buying consumer durables, child's education, family holiday or any other personal requirement.
Source: economic times