Many homeowners want to make improvements to their home, not just to improve where they live, but also to increase the house value if they were ever to try to sell their home. However, home improvements can be costly and not everyone has savings to fall back on. If you want to carry out some home improvements but are concerned about how you will cover the cost, here are a few options on how you can finance the work.
Secured Loans
A secured loan is a loan that will use the value of your home to secure the value of a loan. This means that you are using your home as a way to show you will pay the money back as agreed, otherwise, the loan provider is able to take your home away from you in lieu of payment. You should only consider this form of loan if you are sure that you can afford to pay it back. Secured loans are advantageous as they can encourage lenders to lend you a large sum of money without high-interest rates.
Secured loans are considered useful for funding home improvements, as they allow you to make money in the future by adding more value to what your house is worth.
Using Your Home
Many people use remortgaging to cover the costs of home improvements. This means that you will take out a new mortgage in order to repay what you owe on your existing mortgage. This can free up the money you need for improvements if you take out a loan that is greater than what you need to repay the current debt on your existing mortgage.
The amount that you can borrow based on remortgaging will largely depend on how much equity you have in your home. You’ll also need to prove to the mortgage provider that you can afford to pay it back as agreed. But don’t forget that once you have remortgaged, you will be starting to pay your mortgage off again from the beginning, which could increase your payments or extend how long it will take you to be mortgage free.
Bridging Finance
You can also consider short term bridging finance as an option when thinking of ways to cover the costs of home improvements. Bridging finance offers a short-term property-backed loan, which while being like secured loans are only usually offered for between 1 to 18 months before the loan must be repaid in full. You will have to undergo an application process when applying for bridging finance but is a lot simpler than other applications, such as the remortgaging application process. Additionally, the process is usually completed within 14 days.
Bridging loans can be offered against many different property types and are often used to fund conversion or restoration work. They are particularly popular with property investors who want to renovate a home before they flip it.
It can be difficult to try and find the money required to finance home improvements, but this guide to a few of the most popular options allow you to pick a route that best suits your needs.
