Homebase Mortgages

Smart Ways to Afford a Home Renovation

There is no such thing as cheap home repair or home renovation. Even if you’re the absolute best when it comes to seeking bargain deals, the cost is bound to be more than what most people can freely spend. There will be materials, labour, plus some other extra costs that are bound to be a part of having your home in tip top shape.

There is no denying it. A major home project like a renovation is worth a substantial amount of your yearly income; won’t you want to know ways on how can you fund it without letting go of the other things that you enjoy? Lucky for you, you’re at the right page!

Start a Savings Fund

This would be the most obvious in this list but we all know that a huge percentage of people dip into their savings fund and end with very little savings at all. For this to work, you have to set up a dedicated savings fund that is solely for home renovation projects. If you’ve got a little bit extra left from your weekly or monthly budget, this might be the easiest option to fo fund your home renovation.

Get a Personal Loan

A personal loan is an unsecured loan. This means that you won’t need to have any collateral for the money you borrow. Because the lender will be left with nothing if you fail to pay, the qualifications for this loan is often very strict. A personal loan also comes with a high-interest rate and a relatively lesser maximum amount compared to other options for financing.

It should be noted that a higher interest rate means that the overall cost of your home improvement projects will be increased by the same interest rate so choosing this option isn’t that attractive unless you can reap tremendous benefits from the home improvement. Be sure that the terms set by your lender will be compatible with your financial means.

Opt for Home Equity Loans and Lines of Credit

If you’ve already built up quite some equity on your home, a HELOC or a home equity loan would be a great way to use that to your advantage.

Home equity loans lets you borrow a specified lump amount from your equity. There will be terms of repayment that you will have to agree to, then you’ll be lent some money, and then you repay the borrowed amount according to the terms of the loan including the interest.

As for a HELOC, it’s like a credit card in the sense that it has a revolving line of credit. You can reuse or withdraw from the determined amount as long as you pay before the credit expires. If you need money now and is sure that you have some more incoming in the future, this might be worth looking into.

Just note that both home equity loan and HELOC must be fully paid back with the interest. The amount you pay will usually be set per month so you need to ensure that your cash flow will allow for this. Failing to pay on time can result in the lender foreclosing your home.

Interested in getting a HELOC or a home equity loan? Contact us so we can answer your questions and help you be on your way to a home renovation that you can afford.

Homebase Mortgages