While home renovations can be stressful, you can also use them to add significant value to your home. However, it’s never as simple as merely deciding to extend the kitchen or add an en-suite to the master bedroom. You need to know how you are going to fund your renovations, too. For many, this is where they need to stop and carefully decide which option is best for you. If you’re planning a home renovation but are unsure how to afford it, here are four ways to fund your project and transform your home.
Pay With Cash
Paying for your roof replacement, extension, or kitchen remodel with cash is the easiest way. You don’t need to rely on a bank loan that you’ll need to pay back, and there won’t be any interest. However, you’ll need to show patience and save up enough cash for your project, which could take a long time, making you change your mind halfway through. If you’re already in debt or on a tight budget, this is not ideal, and as you never know how much the project will actually cost, you may not have enough saved up to pay the construction company.
Use Your Credit Card
For smaller home improvements, you can use a credit card. Many banks will accept your application and give you a credit card within a few weeks, which will usually come with at least 12 months of low or even zero interest. Like paying in cash, this is easier than getting a loan. Still, you’ll not be able to fund larger projects with a credit card, especially if you don’t have exceptional credit, to begin with. If you fail to pay it back within the 12-month period, you will incur more interest, making the project more expensive than it needs to be.
Consider Secured and Unsecured Loans
Looking at secured and unsecured loans can give you other options when hoping to fund your home improvement projects. Unsecured loans are more popular, as you don’t have to put anything up as collateral, and you can obtain enough money to fund larger projects. However, they come with high-interest rates. Conversely, a secured loan will have lower interest rates, but it comes with the risk of losing your possessions if you fail to pay the money back on time.
Remortgaging your home to pay for home improvements is also useful, but many should consider it a last resort. They can be expensive when making early repayments, and it increases your mortgage for several more years at the least. Still, your home’s equity means you can get more cash, and you may also be able to secure a more substantial interest rate. Beware, however, that your lender may not be willing to accept your application, so you’ll need a backup plan if this fails.
Everyone will have different situations when looking for a way to fund their home renovations. While it can be stressful, it can also boost your home’s value, making it a worthy endeavor that will make you feel at peace with your home again.