With more people choosing to renovate and extend their homes rather than go through the lengthy and expensive process of moving to a new property, the question of how to finance your home improvements is increasingly relevant. There are three common options for those looking for financial solutions, and choosing the right one for you will be largely dependent on your current income and your financial situation.
If you’re looking for ways to finance your home extension, consider the options carefully and talk to financial professionals before you commit. You could soon be relaxing in your new extension with fewer money worries than you might expect. For those who have decided to start an extension project, these three financing options could be a game-changer.
Option One: Remortgaging
If you currently own your property, then a viable option is to simply start the remortgaging process. There are a number of ways to make the most of this option, but transferring your existing mortgage to a more flexible adjustable mortgage rate could see you taking advantage of fluctuating interest rates. This does come with pros and cons, so you should consider the option carefully before choosing this possibility. Look at the possible remortgaging offers in the current financial climate and you might be surprised by the potential reduction in your regular payments. Much of this strategy will result from the current status of your credit score, so ensure that this is healthy before you consider moving forward.
Option Two: Home Improvement Loans
Many banks offer good interest rates on a home improvement loan, and you will have the choice of either a secured or unsecured loan type. Secured loans are very useful for those larger projects that will require a more extensive loan amount, but if your project is estimated to cost less than $25k, then you can normally apply for an unsecured loan with a fixed rate of interest.
Remember that banks will require some seriously stringent checks on your finances before they grant a loan of any kind. Usually, a bank will check your verifiable income and will naturally assess your credit history as well. If you can provide positive proof of both, then this could be the solution to your extension costs.
Option Three: Credit Cards
This is perhaps the least used option for those intending to pay for a costly extension. Spreading your payments out through your credit card is certainly an easy option, but the high-interest rates may be challenging to justify.
You should only consider using a credit card to pay for home improvement projects if the overall costs of your extension are relatively modest. The reason why many homeowners do opt for this method is because credit cards offer a high level of protection in cases where substandard work is built, or if the materials that are used are found to be below the expected quality. Also, if you have a credit card that offers no rate of interest in the first year and you think that you will be able to pay back the total amount owing before that time limit, this could end up being a low-cost solution to financing your extension.
Before you commit to any kind of expensive home improvements, you should always arrange your finances first. Look around for the best deals, and you could end up with a cost-friendly home extension that adds real dollar value to your home.