A home renovation might be required in order to make necessary ‘running repairs’ to your home, or you might be looking at making changes to enhance your lifestyle or add value to your property with a view to selling it at a later date. Whatever the reason, undertaking a home renovation is a big piece of work, and usually a costly one. On top of that, home renovations are exciting and stressful all at the same time.
By planning your renovation effectively, whether you’re looking at a big job such as building an extension or a smaller project with a few internal works, you will save yourself a lot of time, money, and stress in both the short and the long-term. While the cost of your home renovation will depend on the work you’re looking to have done, you have a number of options available when it comes to financing your home renovation.
Depending on your personal financial goals, you might have been saving for some time; perhaps even with the specific goal of paying for a home renovation with the money you have saved. Alternatively, you might have simply been saving to ensure financial stability, and be considering using this capital now you’ve decided you need to look at home renovation.
Using your personal savings to pay for a home renovation can be convenient and satisfying in a number of ways, including:
- You feel you’ve earned a reward for all your years of saving
- You have the finance to complete whatever work you want
- You may be able to cover the cost yourself without relying on other sources of finance
At the same time, depending on the home renovations you’re looking to complete, you may wish or be able to combine your savings with another option to ensure you can fully finance the necessary work.
Re-mortgaging Your Home
Releasing finance from your home to pay for further improvements is an option you may wish to explore, and if you have already paid the majority of your mortgage or have built up equity in your property it may well be the most attractive one. The beauty of this option is that you will be able to choose how much finance or equity you wish to release from your property, and if you’re planning to use the renovations to add value ahead of a sale, a financial advisor will help you to calculate how much it is best to release.
Before re-mortgaging you should consider your wider financial situation and ensure you will continue to be able to meet your repayment obligations.
“At the same time, depending on the home renovations you’re looking to complete, you may wish or be able to combine your savings with another option to ensure you can fully finance the necessary work.”
A Personal Loan
Depending on your credit status and the eligibility criteria of lenders, you may be able to finance your home renovations with a personal loan. If you are planning to use a personal loan for home renovations, you should ensure you are clear on how much you wish to borrow, and decide whether you will use some of your own savings alongside the loan to pay for the work. Before applying for a loan it is worth having some quotes for the work you want done, and if possible getting the supplier to guarantee these, so you don’t end up having to find extra money later having already taken out a loan.
Don’t apply to borrow more money than you need, as you may end up paying more back in interest unnecessarily. However, if you are unsure of what you need, or have been unable to attain a guaranteed, fixed quote for the work, check with lenders as to whether you will be able to make an early repayment if possible, and any fees that may be associated with this.
Financing Your Home Renovation
Ensure you carefully explore all the options available to you prior to making any decision around financing your home renovation. You should also consider the outcomes and potential benefits of the work you are looking to undertake, particularly if you are planning to use the renovations to increase the value of your home to sell in the near future.
Disclaimer: This article contains general comments and recommendations only. This article has been prepared without taking account of your objectives, financial situation or needs. Before taking any action, you should consider the appropriateness of the comments made in the article, having regard to your objectives, financial situation and needs. If this article relates to the acquisition, or possible acquisition, of a particular credit product you should obtain and consider the relevant disclosure documents before applying for the product.