Just a few years ago, not many banks were offering any finance for improvement or extension of houses. But things are changing. In addition to the old players - Housing Development Finance Corporation (HDFC) and Citibank's Shelters - other banks too are willing to finance any repair, renovation or extension of your existing house.

Foreign banks such as Standard Chartered and Hongkong & Shanghai Banking Corporation, which otherwise offer home loans, do not have anything on those lines yet. In the private sector, ICICI is hoping to offer home loan soon, and may be something for home improvement, but nothing so far. However, many public sector banks are already into it. Punjab National Bank is one such bank which is offering competitive rates on loans for buying houses, as well as for repair andextension work. Then there are others such as Syndicate Bank, which have restricted offers - for instance, only to an account holder whose salary cheque is being credited to the bank directly.

For comparison, let's take HDFC, Citibank and Punjab National Bank. First, the maximum amount of loan. HDFC grants up to 70 per cent of the estimate for home extension or repair. Citibank's loan quantum is Rs 2.1 lakh to Rs 5 lakh for the purpose. PNB, on the other hand, allows a maximum loan of Rs 50 lakh - this is the maximum for both buying a house and making alterations. Talking about the PNB loan, B B Bhowmik, deputy divisional manager, says that the amount of loan varies with the authorities sanctioning it. For instance, a branch office can sanction up to Rs 5 lakh, a zonal office can approve a loan of up to Rs 20 lakh, and a general manager can grant up to Rs 50 lakh.

But essentially, the loan amount depends on the repaying capacity of the customer. The repaying capacity is determined by the gross income ofthe person applying for such a loan. And that goes for all banks and financial institutions.

Another plus point with the PNB loan is that one can repay for 20 years, says Bhowmik. As against that, the maximum repayment period allowed by HDFC is eight years, and that by Citibank's Shelters five years.

Conditions for mortgage of the property, which is a must for the loan, also varies from bank to bank. For instance, PNB offers the loan throughout the country and therefore the location of the house does not matter. Same with HDFC which has branches across the country. But Citibank's Shelters is more specific about the location and status of the house being mortgaged. Says the spokesperson for Shelters that it has to be a freehold registered house in Delhi, Noida, Ghaziabad, Faridabad or Gurgaon. Shelters has provision for power of attorney also. But it's only for the Delhi Development Authority (DDA) and society apartments in Delhi.

The rate of interest, which is another significant issue for a homeimprovement loan, also varies. HDFC has four slabs -- for a three-year period the rate of interest is 11 per cent, for four years it's 12 per cent, for five years it's 13 per cent and for six to eight years it's 14 per cent. Shelters has a uniform interest slab of 17.5 per cent on a monthly reducing balance. The interest charged is very reasonable at PNB, says Bhowmik. Up to a loan amount of Rs 2 lakh, the interest charged is 12 per cent plus tax at PNB. And for any amount upwards of Rs 2 lakh, the rate of interest is 13.5 per cent plus tax. Coming to the other additional costs, Bhowmik says that even in case of pre-payment of the loan, there's no penalty imposed on the customer in PNB, unlike in most other banks.

Similarly, there's no administrative fee for such a loan at PNB, only a nominal processing fee of Rs 200. But HDFC charges 1 per cent of the loan amount as an upfront for processing. Shelters charges Rs 3,000 for processing the loan Plus at the time of disbursal of the loan, the customer needs topay 2 per cent of the loan amount, says the spokesperson.Apart from the cost factor, what matters most is the swiftness with which a loan is disbursed. The HDFC spokesperson says that it takes about two weeks after applying. It happens in stages - application with submission of the right documents, site visit, and disbursal of loan. At Shelters too, the time taken is usually two weeks. But, on a priority basis, it can be worked out faster. PNB claims to be the quickest with its time frame of seven days, provided all the documents are in place. Adds Bhowmik that on a priority basis, loans can even be disbursed within two days of filing the application.The three players discussed here belong to three different sectors, yet they are offering similar products on terms which vary only slightly. In the given situation, the only major point of differentiation is their efficiency in customer servicing. And only customers will decide what they want.