Top 5 Ways to Finance Home Renovation
Even though you may be aware that your home is overdue a renovation, you just might doubt your ability to provide funds for such an expensive project. Of course, the price itself might vary on your project’s goals and methods used but, nonetheless, the project of renovating your home never comes cheap. Still, in most cases, it is more of a necessity than a luxury. A poor insulation, low-quality doors and single-pane windows will, in time, cost you more than this renovation, not to mention the damage that can be caused by a leaking roof. With this in mind and without further ado, here are five ways for you to “finance home renovation“.
1. Start a savings account
The reason why home renovation is perceived as expensive is due to the fact that you have to immediately remedy the damage that has been made over a long period of time. However, what if this was not the case. What if you took the price of the renovation project and divided it so that you can see just how much you have to pay for it each month. For instance, your roof needs to be replaced every 20 to 50 years and even though this is an expensive project when divided over this period, it really doesn’t cost you much. This is why starting a savings account in time is usually the best way to go.
2. Take out a second home loan
In a situation where you didn’t start a savings account in time, your best bet would probably be to take out a second home loan. In this way, you can even tap in on your equity and avoid refinancing while doing so. The main concern that a lot of people have about this is the interest on the second mortgage, which is usually significantly higher than on the first one. On the other hand, the interest payment on the second mortgage might be tax deductible, which is always worth checking.
3. Apply for a personal loan
What if, you aren’t in for a full home remodel but aim at handling this one step at the time? In this scenario, you wouldn’t need as much money, which could make considering a personal loan worth your while. The main reason why people avoid personal loans in the first place is their high-interest rates but, then again, there is little to no uniformity here and you can easily find rates as low as 7.50 percent when you are looking for personal loans in Australia. This way, you can get a loan of $5,000 to $50,000 in no time, although, you do need to have a great credit history to back you up.
4. Use your credit card
When it comes to purchasing materials and paying for services, you can always turn to a credit card as a substitute for cash. The reason why this is preferable to cash, however, is due to the fact that your credit card might have a reward system for the amount of money you spend. Still, before resorting to this solution, it might be for the best to check the interest rate of your credit card, seeing as how you will have to pay off the balance in full every single month. Speaking of which, keep in mind that the interest rates on credit cards usually tend to be much higher than those on loans.
5. Redraw on your home loan
In the end, a lot of people make extra repayments in order to pay off their debt a bit sooner. Well, in this situation, you can redraw a bit of this money in order to pay for the renovation. To make the long story short, this solution is quite similar to starting a savings account, seeing as how you are taking the money from those extra payments. On the other hand, it sets back those who hoped to repay their loan early.