The living space you currently have can easily transform into a canvas ready to be transformed. Whether it’s creating a more modern kitchen or repainting the rooms to be more colourful, all home renovations are going to have its costs according to personal circumstances and financial situations. There are a few options to take into consideration when it comes to gathering the funds to finance a home renovation. Wondering how to sort out your renovation finance? Keep reading for our tips!
Apart from providing your home with a makeover, taking on a renovation project is a great opportunity for all the savings you’ve put aside for years to finally pay off. Your renovation finance can become less of a burden with using cash as you’re able to avoid paying interest or gathering a heavy debt. For most renovations, they can get quite costly after adding it all up. This would mean that your personal savings can alternatively be targeted towards smaller projects such as installing a new door.
Low Interest Is Your Best Interest
Although credit cards may be seen as a notorious trap to pile up more debt, signing up for a low-interest credit card is a strategic move in gathering some small renovation finances. With inexpensive and minor projects, these credit cards are beneficial as they have interest rates of 14% or less per annum with most providers allowing up to 55 days interest-free. Despite the convenience when purchasing products, it is highly important to pay off the amount owing before the due date each month to avoid extra fees or interest. On the other hand, it is possible to budget your funds enough to finance the whole project without any interest.
Take A Personal Loan
You may also opt to apply for a personal loan from a range of lenders that are able to assess your current needs and finances. The size of the renovation also factors into the decision of which type of personal loan to take out. For a medium-sized renovation, an unsecured personal loan offers smaller amounts from $5000 to $30,000 to be paid off within 7 years but with the possibility of high-interest rates. Meanwhile, a larger renovation may be better suited to a secured personal loan providing bigger amounts to be paid off within a longer period, along with lower interest rates. Taking out a loan is a cost-effective option for your renovation finances but remember to keep all the terms and conditions in mind.
Utilising The Home’s Equity
For large scale renovations, there is the choice to incorporate your current property loan to assist in financing the project. Equity can be defined as the difference between the bank’s value of the house and the amount owing on your mortgage. A home equity loan is a common method to fund home renovations as interest rates are lower and have the chance to borrow 80% of the home value. However, this also results in more repayments towards your whole mortgage.
Refinance or Redraw
Through refinancing your mortgage with a new lender, you may be eligible for a decrease in monthly repayments or a line of credit that can open up doors to getting your renovations underway. Alternatively, for some home loans, you may be able to claim the extra repayments you’ve already made to accommodate for your renovation finances instead.
Thinking of starting a renovation project? Our team at iBuildNew can help you! Contact us on 1300 943 640 or email@example.com.