Owning your dream home is the ultimate goal for a lot of people. You might have bought a house for a good price that needs a bit of TLC to bring it up to scratch, and you could have big renovation plans to make it perfect for you and your family.
However, life being what it is, sometimes these big home renovations get put on hold due to financial and time constraints. With the ongoing coronavirus pandemic forcing many people to spend more time in their homes, there has never been a better time to craft your dream living space.
So whether you want a high-tech kitchen, a state-of-the-art bathroom, or a tranquil bedroom, here are some tips on how you can finance those long-awaited home renovations.
1. Refinancing your property
Refinancing your house involves transferring your mortgage from one lender to another, resulting in releasing equity that can then be used to fund extensive home renovations.
Be aware, however, that refinancing your property will result in larger repayments over the full term of your mortgage, which could extend decades into the future.
To avoid financial difficulties in the future, you should be confident that you will be able to continue repaying the higher amount when you are older and potentially no longer working. Due to this, refinancing is perhaps the best option only if you are confident that your renovations will add a lot of value to your property.
2. Take out a personal loan
Personal loans are installment loans with fixed interest rates. This means that you receive a set amount of money that must be paid off in monthly installments over a set period of time.
Taking out a personal loan is a popular financing option for renovations as there are no home appraisal costs or prepayment fees. The fixed interest rate also means that you won’t be paying huge amounts of interest on top of your loan over time.
By repaying your personal loan in installments, you can enjoy the dream home you’ve always wanted without the worry of one big bill to pay.
3. Use a credit card
If the cost of your renovation work isn’t too high, you might consider using a credit card to make payments. Similar to a personal loan, you can use your credit card to make payments up to your card’s maximum amount.
You can then settle the balance up to and including your payment date, usually settled on a monthly basis. However, make sure that, with your additional home improvement purchases, you are still able to make your credit card repayments.
Missing payment deadlines can lower your credit score, which will affect your chances of being approved for a loan or credit card in the future. Make sure you decide on a budget and stick to it, to ensure that you are able to afford making loan and credit card repayments on time.
Ensure to spend plenty of time thinking through what the best option is for you, but the above ideas are a great way to get you started.