How to Finance Your Home Improvements in 3 Easy Steps

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Many homeowners are choosing to improve their homes and surrounding property. From adding a new bathroom or kitchen to renovating the garden, it makes your property look new. In the US, 80% of homes need improvement or remodeling because they are more than 20 years old.

The kitchen remains the most renovated room in the home, followed by the bathroom and living room. Google search trends show that kitchen remodeling increased by 23%, where homeowners spend $5,000 to $15,000 on home improvement projects.

The Price of Home Improvement

The price of home improvements depends on the type of the materials, size of the project and the finish. The average cost of a new bathroom is between $4,000 to $6,000. A medium-sized new kitchen costs $3,000 to $5,000. For bigger rooms and larger projects such as garden renovations and extensions, the cost is between $10,000 to $20,000 or more.

In general, contractors usually suggest around $1,000 to $2,000 per square meter. If you want to renovate or remodel a 3 by 5-metre garden or extension, the cost will be $22,000 to $25,000. On average, the cost of remodeling and renovating your home doubles over the initial cost.

 

The good news is remodeling and renovating your home by adding a double bedroom, bathroom, or extension increases the home value by 23%.

What to Buy First for Home Improvement

Figuring what to buy for your home improvement project is challenging. Not to mention determining your budget, design style and colour palette. To figure out what you need to buy first for your home improvement project, create a decorating file.

Start by pulling anything and everything that you like and want to see in your living space. You can have an actual file or use Pinterest. Store everything from flooring to furniture and more. Once you have the file, embark on remodeling your home.

The floors are big, time-intensive and generally expensive. Some people opt to start with the floors then work up and out. Others opt to do the floors last. This is because floor finishes take a while to cure fully, and you don’t want anyone walking on your floors while covered with tarps.

If you start with the floors first, contractors may spill or damage your finished floors. We recommend you renovate the floors last but make sure to protect the walls as the floor sander may scuff the walls.

With this in mind, the first items to buy include:

  • Paint
  • Wallpaper
  • Other surface finishes

Start with the kitchen as it yields about 70% ROI. A great kitchen sells a house fast. If you’ve an outdated kitchen, brighten up the space. Stick to a plan to complete the remodelling quickly while keeping your wits about you.

Best Options to Finance Your Home Improvement

The following are three ways to finance your home improvement project.

Get a Same Day Loan

You want to transform your home, which means you need new furniture, new lighting, new floors – the full shebang. Sadly, the money is lacking. Lucky for you, you can get a same day loan. Basically, you’ll receive your money within 24 hours after approval. It’s as simple as that. Also it is very easy to apply for a same day loan online.

Several online platforms offer same day loans with higher credit limits – from £300 to £10,000 or more. Unlike a bank loan where your eligibility depends on your credit score, same day loan providers can offer loans even with bad credit.

However, in your application, you need to provide the following:

  • Proof of address
  • Proof of full-time job
  • Banking information

They require your banking information for cash advance purposes that include direct deposit or cheque. If you’ve filed for bankruptcy or had your wage garnished, you’ll not qualify for a same day loan. The short term loan is always advanced to you according to the terms indicated in the contract. For example, you need to repay the loan within a stipulated period – a week, month or year.

Before applying for a same day loan, check the site’s reviews online.

Borrow Money From Close Relatives

One of the benefits of borrowing money from close relatives is that they lend it at a lower rate than banks or same day loan providers. They also lend the money without stringent measures. By borrowing from close relatives, you get to reduce your overall debt level. This boosts your long term credit and does not affect your credit score.

It also allows you to have more hard-earned cash in your hand to complete your home improvement project. Borrowing from close relatives has more flexibility. With a traditional bank loan, there are extra fees for late payment. It’s also a hassle to renegotiate payment options. Even some lenders charge a fee when you repay your loan early.

Close relatives are flexible as they can extend the grace period and reduce your monthly minimum payment. However, prepare for strained relationships and misunderstandings if you fail to repay the loan.

To avoid these issues and more, craft a promissory note loan agreement. It should outline the loan terms, such as repayment schedule and interest rate.

Live On a Budget for a While and Finance the Improvements by Yourself

A budget is a crucial planning tool that helps you plan your finances. According to a 2016 study, only 41% of people follow a budget. Effective budgeting involves developing a financial plan that helps you achieve your goals. As the most critical tool in your finance utility belt, a detailed budget should break down your income and expenses by month.

To live on a budget, we recommend following the 50-20-30 rule. Popularised by Senator Elizabeth Warren in her book “All Your Worth: The Ultimate Lifetime Money Plan,” it’s an intuitive plan. It can help you achieve your financial goals.

The rule states that you spend 50% of your after-tax income on needs and then split the remaining between 20% savings and 30% to everything else. Since you’re living on a budget, you can allocate 10 to 15% from the 30% to a home improvement fund. By following this rule, you can cover your expenses, save for emergencies, and all at the same time make renovations to your home.

Final Thoughts

There are several ways to raise money for your home improvement project. But you must first analyze the project, have a budget and only borrow what you can repay. Avoid getting into too much debt, and make sure you weigh up all your options. Do not rush into anything without understanding the implications.