There are many reasons why homeowners may choose to make some repairs,renovations or general improvements around the house. The most common reason is where older houses are falling into disrepair and are out of date. Another common reason is to ensure a faster sale. Perhaps it is a simple matter of needing more space.
Whatever the reason,a large percentage of homeowners cannot afford to make the home improvements that they dream of. Fortunately,there are a number of different finance options available when it comes to repairs,renovations and remodelling your home. Always remember that just about any home improvement will add value to your property and are therefore worthwhile investing in.
Borrowing money for any reason will involve a credit check and if your credit history is below average you may be turned down by a high street lender. In this instance a bad credit loan service such as Money Trumpet may be an option,click here to see their services.
1. Access Loan
Also called revolving loans,equity loans or credit loans,access loans provide homeowners with the opportunity to access the equity in their home loan specifically for home improvements. The equity is the amount that has been repaid on the principal loan amount. For example,if you took out home loan worth Â£100,000 and have repaid Â£20,000,the equity in the loan is Â£20,000 and this is the amount that you have to put towards home renovations. However,the loan may have certain restrictions and limitations that you need to be aware of and it is important to read the loan agreement carefully before accessing equity.
2. Second Mortgage
Unlike a home loan,a mortgage is finance that is secured by the property rather than the property securing the loan. Sounds confusing but it basically means that your home stands as security or collateral for the mortgage. This means that you can take out a second (or even 3rd) mortgage on your home as long as the financial provider deems the property value to be equitable to the loan. Because mortgages have relatively low interest rates when compared to other types of loans,this is a good way to finance home improvement projects. However,it does mean that you have another loan to repay and if you default on the loan,your home will be repossessed by the bank and sold to recover their funds. It is highly recommended to speak to a financial advisor before taking out a second mortgage on your home.
3. Short-Term Loans
Short-term loans – like a personal loan from a bank or other types of loan providers – are a good way to finance smaller,less costly renovation projects. The loans normally have a repayment period of under 2 years and provide smaller loan amounts. On the down side,they do have high interest rates that can make them a rather expensive financing option for home renovations. However,the loans do not require any collateral or security in order for the loan to be approved.