Do you feel the need to change your house because it's too old? But it's way easier to arrange the funding for house renovation than going out and buying a new place. You can make your existing house like a brand new designer home by renovating it.
Even if you want to sell your old house, you need to make it worth buying. Do you know how to pay for expensive home repairs? This post provides you with various ways of financing your house renovation.
5 Ways Of Funding Your House Renovation
These are the proven 5 ways to arrange for the money to renovate and decorate your old house like a new one!
1.Use Your Savings
You might be expecting home improvement loans or some other kind of credit on top of this list. But that is an option if you are in a hurry or don't have any means to finance your home renovation project. If you don't have savings and can wait, start renovating your nest after you have sufficient money.
Don't look out for finance if you have money in your account. Use that money to build your dream house. In this way, you don't need to pay a massive chunk of money as interest and don't need to worry about EMIs every month.
2.Apply For A Personal Loan
The competitive rates of the personal loans amongst the bank and NBFCs in the past few years significantly benefitted the borrower. Getting a loan for house renovations has never been this easier! If you have a good credit score you can easily get a 20000 loan.
It will go in your favour if you maintain a good credit score. You get the best interest rates with a positive credit score from every financial institution. Don't forget to make a loan comparison between various banks and NBFCs. Select the one with reasonable rates and repayment tenure.
3.Pay From Your Credit Card
If you need only small funding for home renovation, your credit card would be enough. Do the majority of payments via your credit card, which you can repay in instalments to your credit card company. Some credit card providers also offer a 0% interest rate if you pay the EMI on time.
But it would be best to have a reasonable credit limit to take full benefit of your credit card. And that is possible only when you have a good credit score. So pay your bills regularly and don't skip any EMIs. If you are applying for a new credit card, enquire about its annual fee and other terms and conditions.
4.Get A Home Equity Loan
You put your home as collateral and take a lump sum loan under a home equity loan. Getting a mortgage to renovate a house is a good option if you need to pay for expensive home repairs. You also get better interest rates on a home equity loan as you put your home as collateral.
Be careful before applying for a home equity loan. Your home can get foreclosed if you don't pay a certain number of EMIs. Always review your ability to pay the EMI before applying for home equity or any other loan.
5.Refinance Your Current Mortgage
Refinancing means you replace your current mortgage with another bigger loan. It's a win-win situation. You get some extra bucks for your renovation, which is also at a lesser interest rate.
But this lucrative option for financing house renovations also comes with additional costs like taxes, the foreclosing fee of the current loan, appraisal charges, etc. And you extend your time to repay the loan as the amount is more extensive this time.
Key Take Away
The best way to fund your house renovation is always to pay from your savings without taking any debt. But that's not viable for everyone. You can apply for a personal loan as a home improvement loan, get a mortgage, or pay via credit card.
All these options are open and come with their pros and cons. Study their terms and conditions, interest rates, and repayment tenure wisely and choose a suitable alternative to save money on a home renovation.
Author Bio: Tanya Singh works as a Content Marketer at LoanTube - a loan comparison marketplace where borrowers can connect with multiple lenders via a convenient and transparent application. She writes about topics related to personal finance and loans helping her readers in making smart decisions when they need to borrow. Yoga brings her inner peace and strength, and travelling brings her joy (besides her work of course).
