Many homeowners in the UK prefer improving their homes than moving into a new one. Reason for this is high house prices and the overall shortage in property supply. It can increase the value of the estate with over 10%, depending on their nature. Regardless of whatever home renovations you are planning for, arranging funds for your home improvement project is essential. We’ve listed 5 best ways to fund your next home improvement project.
Use your Savings
It is by far the easiest way to fund any home improvement. Using your savings or matured savings bonds to make home improvements presents more sense than buying a new car or investing in holidays.
If you have the cash, you can use it – but don’t use up all your savings on upgrading your home. To avoid finishing up your savings in one go, it is better to build up a savings pot and set a budget.
If you need only a small amount, applying for a credit card can be another way to fund your home renovations. There are many banks out there who even give their customers 0% interest credit cards. Since banks will lend you the money, so, you need to have a good credit score and history to get a credit card.
Please note taking out a credit card is a huge responsibility. Therefore, repayment of credit cards is necessary else it can negatively impact your credit score.
Unsecured Loans are preferred by a lot of people as these loans don’t require homeowners to put their house as collateral. You can get the loan instantly when you apply online, in many cases, even on the same day. And because you don’t put your asset on risk, these loans usually have a higher interest rate.
Please note that personal loans are unsecured, and lenders out there need you to have a steady income and a good credit score.
The other option is borrowing a secured loan where you have to put your asset like your car or your home as collateral. If you fail to repay the loan, then the lender or the bank has all the right to possess the collateral.
Advantage of taking out a secured loan is that you can take out a large sum for lower interest rates. Unlike unsecured loans, the approval process of secured loans takes time as it takes time to assess the collateral you have provided your bank/lender with.
If you need to borrow a large amount of money for home improvements, and you have enough equity in your home, remortgaging could be a great solution. Though this can be tricky business as early repayments towards your current lender may involve some fees and this, in turn, can prove expensive for you. But if your application gets accepted, you may secure a better deal and sufficient funds basis equity on your home for further improvements.
There are many ways to fund your home improvements and all of them come with pros and cons. Therefore, plan and analyse your circumstances and don’t take out debt if you are unsure about the repayments.