Looking to renovate your home?

Many homeowners dream of renovating their property at some point. Whether you purchased an older home with the intention of renovating, or your family has been growing and you need more room, or you’ve simply been inspired by the latest DIY television show, there are many reasons that a renovation can be appealing. However, when you are ready to begin, the first thing you need to consider is how you are going to finance your home renovation.

Some of the more typical options include:

Using your home equity – Equity is the financial difference between the current value of the property and the amount you owe. If the value of your home has increased, you may have more equity than the amount you have paid on the loan, and all equity you have built up in the home can be used to finance a renovation.

However, the amount of equity you have may not be the exact amount you will be able to borrow as you will need to pay the cost of servicing the loan.

Refinance your current loan – A popular way to finance a home renovation is to refinance your current home loan. You may be able to secure a better interest rate, or a longer-term loan, which could reduce your payments and allow you to have more money every month to spend on renovations and other things you may need.
Construction loan – Another option is a construction loan. This type of loan allows you to spend funds little by little as you receive invoices. This type of loan can save you money, as you only pay interest on the payments you make until the loan is completely drawn.
Personal loan – While this type of loan is typically associated with the purchase of vehicles, holidays, furniture, and other large expenses, many homeowners are using personal loans to fund their renovation projects. The fixed loan principal and set terms provide a controlled environment for repaying the debt, and the strict schedule allows for easy budgeting. Because personal loans typically run for a short term, you can often reduce your overall interest costs.

Most lenders advise that you set aside some of your renovation loan to cover items not included in your building contract. In many cases, once the renovation is under way, homeowners find that they would like to add things and having some money set aside ensures you do not have to renegotiate the loan.

If you are thinking about renovating your home, it is a good idea to talk to a local mortgage broker to ensure that you are financially ready to take on another loan.

At Tradebusters Connect we have selected a limited number of mortgage brokers in your local area to be members of our directory service. We are sure one of them will be a good choice for you.