If you had the money, what would be your dream home addition? Would you add another room? Renovate the kitchen? Maybe extend the ceiling for more room? All of these projects are nice ideas that would make your home more pleasant to live in and add value to your property. But what can you do if you don’t have the savings to pay for everything? The good news is there are a number of ways to finance these renovations so you can build that dream home addition now.
Home Loan Refinance
One way to finance your dream home addition is by refinancing your mortgage to a larger loan. If you explain to your bank or mortgage broker that you are trying to expand the property, they may be willing to give you a larger home loan based on the increased value of your property after the renovations are finished. This will give you access to the money you need at the relatively low interest rate of your home loan. You’ll also have the most time to pay off this type of financing. The downside of this approach is that it will take longer for you to completely pay off your home loan and that the loan is secured by your property. If you can’t make the payments, you could lose your home.
Home Equity Line of Credit
If you’ve been paying off your home loan for a few years, you’ve started to build equity in the property. This is the value you get for owning part of the property debt-free. Lenders will be willing to give you a line of credit for this value. If you have a home equity line of credit, you can borrow money through it when you want to, like to pay for your home additions. The interest rate will be a bit higher for this loan than a home loan and you’ll need to pay the money back sooner, but it’s easier to set up and is a more flexible account. However, if you don’t have home equity yet, you won’t be able to get a home equity line of credit.
Personal Loans
You can also turn to a personal loan unrelated to your property to pay for your dream home addition. This means either taking out a regular bank loan or paying for everything on your credit cards. Personal loans are only secured by your credit rating so if you can’t pay the money back, you won’t lose your house. The downside with these loans is that they charge a higher interest rate than a home loan or a home equity line of credit.
Contractor Loans
Some of the larger contractors also offer financing to their customers. This way they can help more Australians afford to pay for new projects. Getting a contractor loan can be convenient because then you only need to deal with one company for your home addition and your financing; you don’t need to involve an outside lender. The downside of this approach is that contractor loans typically don’t offer great terms and are more expensive than regular bank loans. You’re also limited to the few contactors that offer financing for your construction project.
When it comes to renovating your house, you can see you have plenty of financing options. No matter which option you choose, you should always do plenty of research to find the best deal on the market. Here are a few websites that might help with your research:
Comments (0)Subscribe to CommentsComment