Home improvement is huge right now. Instead of upgrading to a new home, homeowners are opting to make the most of what they currently have by adding a new kitchen, bathroom or conservatory.
It is usually cheaper to renovate rather than move, but unless you have a very healthy bank account overflowing with cash, you need to figure out how best to finance your home improvement project.
How’s Your Credit History?
This might seem like a random question, but it is actually rather relevant. Unless you have savings, you are going to have to borrow money to pay for any planned home improvements. When you apply to borrow money, a lender such as bad credit mortgage will check your credit history to see if you are a safe risk.
If they see anything that concerns them, they will either turn down your application or charge you more interest. So the upshot of this warning is that you should always check your credit report before you make any credit applications. If you find any errors, get them fixed as quickly as possible.
There are many ways to finance a home improvement project, but if you don’t plan on spending too much money, your best bet is to stick the spending on an interest free credit card.
Interest rates are very low right now, so there are some great credit card deals to be found. Use a comparison website to see what deals are available and look for the credit card with the longest interest free offer.
As long as you pay off your debt within the interest free period, it won’t cost you a penny. If you don’t think you can manage this, remember to switch the balance to another interest free deal before you start paying interest.
For bigger projects such as a new kitchen or bathroom, taking out a personal loan is a common way to borrow the money. Personal loans are available from most big high street lenders.
As long as you have good credit and are able to pass the affordability checks with flying colours, you should have no problem securing a personal loan.
For more expensive projects, a secured personal loan might be a good choice. The repayments on a secured loan are cheaper because you are using your home as collateral for the loan. However, if you struggle to make the loan repayments, your home is at risk.
Another option is to re-mortgage to release equity in your property. You can then use the cash to fund your home improvement project. This is an easy way to pay for expensive renovations, such as home extensions. The downside is that you will be paying a lot in interest over the long term and if you don’t keep up with the repayments, the lender could repossess your home.
The best way to fund any type of home improvement is to use savings, but if this isn’t possible, look for the cheapest option possible.