If you have been looking through the pages of your favourite home renovation magazine this season, you likely have the perfect renovation plans set out for your home. However, if you are like most homeowners, you are probably thinking about how you can afford the project. We all know that home projects usually go over budget and take much longer to complete than we might like.
Looking into financing for your home renovations can be confusing for those who have not entered these waters before. Increasing the confusion, even more, is the fact that there are multiple routes to take when looking for home renovation financing. Whether you apply for a home renovation loan or simply use your line of credit, here we will discuss the pros and cons of several different options.
Let’s look at some specific ways you can finance the home renovation of your dreams.
Save Your Money
One of the more obvious and one of the most sensible ways to finance your home renovations is to wait patiently and save your money. With a well-planned monthly budget, you can set aside a segment of your income to ultimately pay for your projects in cash. This will be the cheapest option in the long run, as you will avoid having to pay interest on any borrowed money for months into the future.
However, in many cases, this is not possible either because the scale of your project is too large or your monthly income does not allow you to save any money at the moment. In these cases, alternative options are required.
Use Your Home Equity
Taking out a home renovation loan that is secured by the equity on your home can be a good way to find a low rate for financing. Remember that equity is the amount of money that you still owe on your home subtracted from the market value of your home. Using this as collateral with any reputable financial provider can give you a bargaining chip to secure lower rates than otherwise. Make sure to shop around to find the best rate and repayment schedule for your financial situation.
Take Out A Personal Line Of Credit
Taking out a personal loan, either secured or unsecured, is another means of finding the funds you need to complete your home renovation projects. If you have good credit already and have a stable income that will allow you to pay off your debt in a reasonable time, then this may be the simplest means of borrowing money.
The advantage of using a line of credit is that you can decide to borrow only the precise amount of money that you need to complete your projects, and not a cent more. With other borrowing options, you may have to take out additional funds that you do not truly need, leading to higher interest payments that could have been avoided.
Home Renovation Is A Good Investment
The best thing about money spent on home renovations, borrowed or not, is that they are a completely worthwhile investment. If you have planned your projects well, the value of your home will certainly increase when it comes time to put it on the market. In other words, make sure to balance your own personal desires and aesthetic choices with what could potentially provide a higher resale value for the average homebuyer. In the end, you may even make money off a well-conceived home renovation loan plan.
Choose one of the financing options here that works best for your financial situation and see your ambitious projects through to completion.