Home improvement projects are always the next in line after purchasing or renting a home. However, given that you already spent most of your savings and probably are on a mortgage, makes it difficult.
The good news is that there are several options with which you can finance your home improvements. This article discusses the best 3 options that you can use.
Consideration when Financing Home Improvement Projects
Home improvement project is a general term. They are different for everyone. Some require huge funds investments; others will merely be sorted by a few bucks.
Therefore, the following financing options will largely depend on the type of project you want to work on.
Personal Loans/ Savings
This option will apply if your project is smaller. Such projects include, among others; window renovations, sink replacement, wardrobe repairs and toilet make-overs.
Personal loans are offered by banks, financial institutions and friends. The amount is not much, and will not require any collateral at all. Your credibility is purely based on your credit-worthiness.
With the little savings you had left, you can take care of these minor home improvements. Savings save you from having to spend on interests that loans attract.
Refinancing Your Mortgage
Already started paying your mortgage, right? If so, then you can take a second loan from your bank and clear the remaining part of the mortgage. Then, you can use the rest of the amount to finance your improvements.
This is a great option if the current interest rates are lower than those that you are financing your mortgage with. Thus, you can now repay the loan with less interest rates than before. The best part is that you will get to finance your home improvement project.
With this option, your home improvement project can be large or several projects at a go. These include floor renovations, whole-house renovation, swimming pool setup and so on.
Home Equity Loan
How about using your home as equity? Did you know that you can use the value of your home, even if on mortgage, to get a loan? However, the value will be based on the current value of the home.
That is, if the house is mortgaged, you will subtract the remaining amount of the mortgage from the value of the house. Then, this value will be used to get the loan.
Use the loan to finance your home improvement projects.
As long as you have a plan, financing your home improvement projects will always be possible. Based on your type of project, choose the most suitable option among the above 3.