Renovating your home is a great idea – it will add value to your property, and even if you’re not thinking of selling, it will make your home more comfortable to live in. However, a good renovation will cost more than a quick coat of paint and a patch up, and you may need to think about how you are going to finance it if you do choose to go ahead. Here are some ideas that can help you have the home of your dreams.
Using the right credit card in a sensible way can be one of the best (and potentially cheapest) forms of finance available to you. If you already have a card then have a look to see that the interest rate isn’t too high – you can easily forget to keep this in check, especially when your payments are automatic. If you don’t have a card or you want to get a new one with a lower interest rate, look online at Bonsai Finance to see which one will suit you best.
What you should ideally be looking for in a credit card is one that has a low introductory interest period, or zero percent interest deals available – perhaps even a balance transfer option so that you can transfer your old card and pay for the renovations, saving you money from every angle.
If you need to borrow more for a larger project, a credit card might not cover it, so rather than applying for lots of different cards, all with separate interest rates, it could be better to look at personal loans instead. The interest rates are generally lower than with a credit card, plus you are going to know exactly how much you will be paying back and over how long a period, making it easier to budget for.
There are lots of different loans available, depending on your personal circumstances. The ones with the lowest interest rates are for people with good credit, but even if your credit score is fairly low, you may still be able to obtain a loan. You no longer have to go to a high street bank to apply for a loan, and you can look online. Make sure you are borrowing from a reputable source so you are getting the best protection.
Remortgaging might not be an option you have thought about before, but it makes sense when the renovation is extensive. After all, it is going to add value to your property and you should be able to make the money back when you sell your home either now or in the future.
Don’t be tempted to borrow more than you need, though, just because it is available; if you borrow too much you might find that you have trouble recouping the amount through the value of the property, and you might even find – with changing interest rates over time – that you have over-extended your ability to pay. This is why making a thorough plan and budget before you begin is so important because that way you will know almost exactly (there should always be some flexibility) what you are going to need to borrow and pay for.
Rather than asking your bank or lender yourself about remortgaging, it is wise to go through a broker. Although you’ll need to pay for their services, they will be able to take your personal circumstances into account and ensure that the lending your receive is exactly what will suit you best. They can also tap into some great deals that banks won’t offer to individuals.
Borrow From Friends And Family
If you absolutely want to improve your home with a renovation, or you need the extra space (be it a downstairs bathroom, an extra bedroom, or a new kitchen) and can’t afford or don’t want to move, then you will need to finance it. However, sometimes obtaining credit isn’t always as easy as it might seem.
This is when you may want to speak to friends and family about lending you money. This is not something that everyone is comfortable doing, because it does link money with personal relationships and that can cause trouble in the future, but if it is the only option that will allow you to renovate your home, then it's worth investigating.
If you do borrow from people you know, you will need to come to a clear understanding about the terms. Make a legal contract and ensure that your payments are set up automatically so you never miss one. Don’t be surprised if you find that your loved ones don’t want to charge you any interest, but if they are savvy about money they may well add some interest to the loan, so whatever they choose is what you will need to agree to in terms of repayment.
When you are budgeting for your new home renovation and you are working out which option is going to be best for financing it, you will need to know what the costs are going to be. Ensure that you call on at least three companies or tradespeople to come in and give you a price for the work. That way you can compare their costs and their services, and see which one is best value for money. It may be that the cheapest quote is not necessarily the right choice - check the contractors' testimonials, look at their previous projects, and go with what your gut is telling you. A little asking around in your area can usually reveal whether a company has a good reputation or not.
As well as price, if possible, you should see what you get for the money in terms of service and skills. It might be that the cheapest option doesn’t include something essential that the more expensive ones do, for example, and that you would need to have done anyway, thus bumping the price up and causing you to have to backtrack.