Home Improvement TV shows and ‘home makeover’ shows have left many people feeling that their home needs to be upgraded or redecorated in some way. Bigger projects, like extending the home to create a guest suite or teenage pad have also become very popular. However, renovations and repairs can cost a lot of money, aside from saving up, where can the money come from?
Different Loans to Finance Home Improvements:
Home improvement mortgage refinance: Refinancing a mortgage to raise the extra cash is an attractive option for many, since the interest rate can be fixed and the repayments can be made over 20 or 30 years. Bear in mind that the monthly repayments will be low but the accumulated interest over time can amount to quite a lot, making the renovations expensive in the long term.
Dealer financing: Some big hardware stores or home improvement stores offer finance to customers. This can be useful as all the items can be bought under one roof, such as kitchen or bathroom items or new doors or appliances. Check to make sure interest rates are competitive.
Borrowing from family or friends: This would be the ideal way of raising the cash. It is possible that family or friends may not even charge interest, but be sure to have a contract in place that everyone is satisfied with.
Personal loan: A personal loan is an amount of money borrowed from a bank, building society or some other lender. A lump sum will be received which will be paid off monthly. Interest rates are subject to market conditions.
Home equity loans: A home equity loan allows a borrower to borrow against the value of his or her home and is also one of the smartest ways to finance home improvements. A borrower risks losing his or her home if repayments cannot be met, so a careful analysis should be undertaken to determine exactly how much the borrower can afford to pay back each month.
Low interest fixed rate loans: Homeowners, including those who have little or no equity in their property, may qualify for a low interest fixed rate home improvement loan to fund repairs or renovations. A low fixed rate loan is one that guarantees a certain rate of interest either over the life of a loan or for a certain period.
Home equity line of credit: If the borrower is unsure exactly how much the home improvement project will cost, he or she can investigate taking out a home equity line of credit which can be drawn upon as needed. Most lines have provisions that allow a borrower to convert portions of the line to home equity loans at a fixed interest rate.
Getting a Quote to Finance a Home Improvement Loan:
There is a lot of competition among lenders. One of the best ways of getting the best deal is to get quotes on line, which will enable the borrower to research the market and compare different lenders and interest rates.
Another way of getting the best low cost home improvement loan is to involve an reputable independent loan broker. These brokers will charge for their services but this cost can be offset by the amount they can potentially save a borrower by getting the best deal, since they are experts in their field.
Fixing up Your Home and How to Finance it, US Department of Housing and Urban Development
Related Articles of Interest:
Bad Credit Home Mortgage Loans
Buy to Let Mortgages for Second Properties
Why Use the Services of a Mortgage Broker?
Rating: 4 out of 5