Do you want to renovate your old kitchen, bathroom, or overhaul the whole house? There are some renovations that can cost a pretty penny.
A recent survey suggested that homeowners spend more than $50,000 making significant renovations. It is, therefore, vital that you budget properly before you undertake a project.
You might not have enough cash to fund the project fully, but don’t lose the dream house when you can have access to additional funds.
Here are some funding sources to help you create the house of your dreams:
1. Personal Loans
Suppose you want to make a massive renovation to have that dream house but don’t have equity — considering a personal loan is a great option. On average, you can get personal loans between $1000 to $50,000, although a larger amount is available for those with an excellent credit score. The amount you get can go toward a lot of work.
However, the amount you receive will depend on your credit score. Personal loans at Harmoney.com.au are more affordable compared to credit cards.
2. HELOC
HELOC is another excellent option for funding your renovation project. Unfortunately, it uses your home as collateral. This type of loan will not be disbursed as a lump sum, but will be available when you need it through checks.
The method of funding is suitable, especially when you don’t know the amount you’ll be spending on the home improvement project. This type of financing gives you a variable interest rate, and you might have to pay a higher amount in the future.
3. Refinancing Your Mortgage
Refinancing is another way to finance your home improvement projects when you don’t want to take on additional loans. Refinancing is an excellent funding method as it replaces the current mortgage with another one, but gives you a new interest rate.
Homeowners choose this method for numerous reasons. Compare home loan options when you want to refinance; there is a good chance you’ll secure a low-interest rate — less than you’re currently paying.
4. Credit Cards
Many homeowners use this financing method for their home renovations. When you don’t have savings that you can use to pay for renovations, credit cards are of great help. If you can pay off balances quickly, then getting a large credit card bill will boost your credit score.
Unfortunately, credit cards are not perfect. Despite credit cards offering you rewards after spending, in the end, the interest rate will be higher, and you may end up repaying a higher amount.
5. Savings
If the home renovations of your dreams are cosmetic, saving up cash is the best option. In many cases, cash remains the perfect way to pay for home renovations.
Saving means you will not worry about repaying a loan, you’ll have an ideal design, and you’ll stick to your budget.
Bottom Line
Nowadays, many homeowners are renovating their houses. Financing has become tricky. An individual without a large savings account will have to borrow from financial institutions. Think critically about your options before making a decision — the choice you make will affect your personal finances.
