India, Nov. 29 -- Sugata Dasgupta (name changed) bought an apartment in 2017 with a home loan. After closing the loan in 2023, he now wants to upgrade the family kitchen and needs about Rs.3 lakh. He's unsure whether to take a home-improvement loan or use his savings. Which option makes better financial sense?

People who prefer to keep their savings intact for emergencies or investments, and who are opting for the old tax regime, may find a home-renovation loan worthwhile, since the interest deduction can offset part of the cost. Under the old regime, interest on a renovation loan is eligible for a Section 24 deduction, but only up to Rs.30,000 a year, unlike purchase or construction loans where the limit is Rs.2 lakh.

Renovation or hom...