How to Fund Your Home Renovation

Photo by Blue Bird from Pexels

Once you’re settled in a home, the idea of leaving all the memories behind for a different property can be too much to bear.

There are many emotional stresses linked to moving house, not to mention the financial and physical drain it can have.

That’s why a lot of people find themselves trying to fund a renovation instead of moving.

Whether you’ve welcomed a new family member and need some extra room or simply can’t stand your current kitchen any longer, remodeling and renovating is a great option.

However, it can be expensive. So how can you fund a home renovation?

Personal savings

Of course, it’s always better if you can afford your renovation on your own. It’s the easiest way to pay for any DIY work you’d like doing and won’t end with you having to make repayments each month. So perhaps you could skip the family holiday this year and use the money to improve things around the house.

Using your own cash almost means you’ll be more determined to find the best deals and lowest prices, as your budget will be pretty set in stone.

Credit cards

If the renovations are only small, you may be able to apply for a credit card with low-interest rates if you repay each month. With this, you can take the renovating at your own pace and managing the financial side along the way.

The only issue with this option is you’ll need to make sure you have a great credit score to be accepted. That said, if you do have a credit card, it could potentially end up cheaper than getting a loan. Many credit cards also have additional deals like cashback rewards or even air miles the more you spend.

Private lenders

Another alternative for renovation projects is private lender loans. Rather than applying for a mortgage or loan from the bank, you can find private investors to lend you the money in the short term. The loans tend to have much shorter windows for repayment, which means you’ll need to commit to the repayments quite quickly. That said, if you have a regular income, private loans are a good way to get a lump sum quickly.

Secured and unsecured loans

There are typically two types of loans you can get from the bank.

Unsecured loans are a popular choice for property developers or those looking to renovate. However, unsecured loans don’t connect to your other assets, meaning if you are unable to pay the loan for some reason, lenders won’t be able to take the collateral.

Personal loans typically fall into the unsecured category, but as long as you have a good credit history, you should have no issue being accepted. You will need to account for higher interest rates, however.

On the other side, secured loans are connected to collateral like your home or car. As there’s always the possibility that the bank could take your assets if you’re unable to pay, the interest rates tend to be lower.

Secured loans work best for those with a poor credit rating.

The final way to renovate is to remortgage. This could be a good idea for larger renovations and extensions, as the payments will be pieced together with your current outgoings.

There are several ways to fund your DIY. With the right planning, you should be able to find a solution that fits your requirements.