More than 58% of homeowners upgraded their homes last year, spending on average $15,000. With a rise in house prices, it’s a good time to customize your own home rather than move and many people are willing to spend more on projects that will add value to their home. You probably felt comfortable to begin with affordable fixes and smaller projects around the house. But what if you feel it’s time to tackle a bigger project? Perhaps you’d like to convert your attic into a extra bedroom or maybe build an extension to create a large open plan kitchen. A major home renovation can dramatically increase the amount of enjoyment you get out of your home and adds value to your property, but finding the money to finance them can be daunting.
Release Your Home’s Equity
Nearly 75% of homeowners say making home improvements or repairs is a good reason to use their home’s equity. It is often sensible to extend your home from a financial point of view, as the cost buying a new house can far outweigh the cost of building. Through a home equity loan, money may be available for large projects and usually with lower interest rates and longer terms than personal loans and credit cards. If you are over 62 with significant home equity built up, you may find it easier to qualify for a reverse mortgage. This will provide you with money for your project but with no monthly mortgage payments to make.
Take Out A Personal Loan
If you’re not eligible for a home improvement loan because you don’t have equity in your property, a personal loan may cover your costs. Many lenders will cap personal loans at around $30,000, although, if your application is accepted, you will receive funds quicker than with an home equity loan.
The interest may be higher but it’s more likely to be at a fixed rate which can make it easier to budget for repayments. If you are on a low income and you’re struggling to find affordable credit, you may be eligible for financing through a Government Home Repair Program but this will only cover urgent repairs and improvements.
Use a Reward Credit Card
Without access to savings or equity in your home, another financing option is a credit card. They come with hefty interest payments but if you can find a card with a 0% APR period and pay off the balance before the promotional period ends, it could make financial sense. You may not be able to pay tradesmen with a credit card but you can use it to buy a suite for your new bathroom or building materials for an extension. If you choose a reward credit card, you’ll also earn cash back or points on your purchases.
Arranging and paying for a large home renovation project can be a daunting prospect but with careful planning and sensible budgeting, the extra space, improved facilities and added value will make it all worthwhile.