Funding Your Home Remodel
If you have fallen out of love with your current home, living there can start to become a bit of a bind.
This is particularly true when you just can’t afford to move to your dream home, or when your financial circumstances have changed since you purchased your home and taking out another mortgage on a different home would be nigh on impossible. Luckily, though, it’s true what they say about a change being as good as a rest, and this old adage applies to the home as well. Why not sit down and make a list of everything you’re not keen on about your home? The chances are that most of those things could be changed without moving house. By carrying out home improvements, you could become happy with your home again. Here are a few ways you could fund those alterations.
Raid the Piggybank
If you have cash stashed away for a rainy day, you could put it to good use by spending it on improvements to your home. Forgoing the new car or dream holiday that you have been saving for in favour of home improvements is a big decision, but there are a few reasons why it might be a good idea. Firstly, the whole family will benefit from the changes for many years to come. A holiday abroad could be an experience of a lifetime, but only for a fortnight and then it’s over. Upgrading your home and saving the holiday for another time is a much more prudent investment.
Speaking of investments — that’s another great reason to update your house instead of going on holiday. Any money you spend on the house will increase its value, so even if you decided in a few years that you still need to move, it won’t be money wasted because the house will be worth a little more. It might give you a little more equity to be spent on your next home. If you were saving for a sports car, on the other hand, consider that it will only get you from A to B.
A secured loan, such as an extension on your existing mortgage or a further loan that is also secured against your house, will allow you to borrow at a lower rate of interest than an unsecured loan. Such is the case with the secured loans on offer from Evolution Money. Additionally, lenders are more likely to allow you to borrow with your house as security if the loan will be paying for upgrades to the house. The loan you are taking out will be used to enhance the value of the property that provides the lender’s security. It’s a win-win situation, but you do need to remember that if you cannot keep up repayments on a loan secured against your home, then your home could be repossessed. Therefore only borrow if you know you will be able to afford to keep up repayments.
Home Improvement Loans
A home improvement loan does exactly what it says on the tin. The lender will be very clear that the loan is for improvements to your home and it will be used as an investment to increase the value of your home. Rates vary, but repayments are typically over three to five years for a loan of between seven and fifteen thousand pounds. Repayments will be higher on this than on an extra amount added to your mortgage, since the repayment term is shorter. However, the advantage of this is that if you can afford higher repayments for a few years, there is a light at the end of the tunnel. Everything will be paid off, and you will have your newly renovated home with no extra repayments within three to five years.
Not everyone has heard of bridging loans before, but they are quite common in the UK. Bridging loans are a form of finance most often used in a short-term manner, to provide quick finance between other financial arrangements, such as a mortgage.
Main image: Ian Haycox @ Flickr
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