Regardless of the size of home renovation that you want to undertake, you will need to look for funds before the project starts. There are numerous options to finance your home renovations. The best means will majorly depend on the financial situation as well as other individual circumstances. Below are top ways on how to finance your renovations:
1. Long-term savings
If for the last few years you have been saving some money in your account, then you may be lucky enough to have some cash piled up for the whole process of renovating your house. The required materials will be purchased with ease and the labour needed won’t be an issue. Having this money in cash is also a better option since you will avoid the interest rates charged and also debts. These renovation jobs aren’t cheap and it is possible that only small projects can be undertaken with ease.
2. Look for low-interest credit cards
It is also advisable that looking for a low-interest credit card is a good option especially if you need funds for small home renovations. This can be minor changes within the home as well as other inexpensive DIY projects. These cards are said to have interest rates of 14% or less per annum with the majority of the providers giving up to 55 days interest-free. One is also required to give monthly payments in full to avoid extra charges or penalties.
3. Application of a personal loan
After adding up all the total costs and getting an estimate required for the home renovation, you can simply apply for a personal loan. After approval of your loan, you will get a lump sum through your account and start your renovation as planned. Out there, you will find different types of lenders who give different personal loans types. For the medium-sized renovation projects, find an unsecured personal loan and for the large ones, consider secured personal loans whose interest rates are slightly lower when compared to unsecured loans.
4. Taking a home equity loan
If you have very large scale home renovations, then taking a home equity loan can be a good choice. Equity is simply the difference between the bank’s valuation of your house and the amount of money you still owe on the mortgage. For instance, if you’re the bank values your home at $750,000 and your mortgage is $450,000, then your equity will be $300,000. The bank will be willing to lend you up to 80% of your home’s value.
5. Refinance your mortgage
Another great option for funding your renovation is by refinancing your mortgage. It’s a wise idea to review the current home loan after few years and look for a more competitive deal on the market. By simply doing this and with a low interest, your monthly repayments reduce and thus saving huge amounts of money that can be used in the renovation of your home.
In conclusion, these are some of the ways in which you can finance your renovations easily. Depending on the size of the renovation, the decision lies with you as to which way to use.