Add Value To Your Property With A Home Improvement Loan

Ways a Home Improvement Loan Can Help With Your Property

couple installing furniture after approved home improvement loan

Renovations are a great way to add value to your home and update it to suit your current needs. Whether you’re planning to renovate your kitchen, bathroom or expand on your living room, create a garden space, or a complete overhaul of your home, renovations take a lot of time and certainly a lot of money to complete. Depending on the size of your renovation project, you could need anything from a few thousand to hundreds of thousands of dollars. With contractor costs, buying materials, building fees, and other unexpected costs, all these need to be considered before you tear up the floorboards and start working on renovations.

Finding the best way to pay for home renovations is the key step in turning your house into a dream home. A home renovation loan is a finance option that allows you to borrow a certain amount of money to complete your renovation plans. We can structure any unused money in a way that incurs no interest!

But before you decide which type of renovation loan works best for you, it’s worth considering every option. We have a few options to help finance your home renovations in which we’ll take a look at in this article.

 

Home Improvement Loan

A home improvement loan provides the finance you need to improve your house or property – and it can range from an extension of your home loan through to a personal loan dedicated to paying for home improvements.

A home improvement loan typically allows you to borrow up to a maximum, often around $50,000 though some lenders have higher limits of up to $75,000. When applying for a home improvement loan it’s important to consider how much you can realistically pay back each month. You can then choose between a secured or unsecured loan, both having different rates, flexibility and repayment requirements.

Secured Loan

Firstly, a secured loan lets you use an asset such as your property as a security. Secured personal loans generally have higher borrowing limits, sometimes up to $100,000. But this depends on the value of your asset.

Bear in mind that when you apply for a secured loan, you agree that if you can’t make repayments, the lender gets to take your asset and sell it to pay the outstanding balance of the loan.

Unsecured Loan

Where a secured loan requires you to secure the loan with an asset, an unsecured loan does not. Compared to secured loans, these loans usually have higher rates and fees. This is because you are borrowing without offering an asset as security. You could borrow up to $50,000, although some lenders may offer more.The terms are usually between one to seven years and depending on your lender, it can either be a fixed interest rate or a variable rate, or even a personalised rate based on your credit score.

When deciding between a secured and unsecured renovation loan, consider the pros and cons. While a secured loan may offer lower interest rates it does come with risks. At the end of the day, which loan is best for you depends on your current financial situation and professional advice from financial experts can give you the confidence to make your renovations a success.

 

Home Loan Top Up

Another option is a home loan top up. Your home tends to be your biggest asset and if you’ve been paying off your mortgage you could use your home as leverage for your home renovation. This is called a ‘home loan top up’. A home loan top up allows you to increase the credit on your existing home loan to help fund your renovation. Home loan top ups essentially tap into the equity of your home and extend some of that amount back to you. This amount depends on how much equity is available in the property as well as your current financial situation.

What Is Home Equity?

Home equity is the percentage of the total property value you actually own. It increases when you pay off your mortgage and reduce your loan balance. Your usable equity is the amount you may be able to access to pay for your renovation.

The benefits of a home loan top up is that it takes out the hassle of juggling multiple accounts and consolidating your debt into one with a single interest rate on them. While it all sounds good and easy, topping up your home loan also means you’re taking on more debt and may increase your loan repayments. Before you decide on a home loan top up make sure you’re comfortable with meeting those repayments. Speaking with a lender or a financial advisor can help ease you into the process and they can draw up a repayment plan that will allow you to pay off the extra amount over a certain period of time.

 

Refinancing Your Home Loan

If you’re still in the planning stage and not particularly in a rush to get started on the home renovations, then it might be in your best interest to review your current home loan and see if you can make some savings there instead. It might be a good time to check if you’re getting the most out of your home loan and if there’s an opportunity to refinance your home loan.

In a nutshell, refinancing means moving your home loan from one lender to another. When you refinance to another lender, it starts the process again and becomes a whole new loan to the lender. If you spend enough time online you might come across home loans that are more suited to you. When you compare home loans and find one that has better interest rates, more flexible features, or better repayment options, then consider refinancing and move to a new lender.

This process can be tiring and with a lot of competing home loan offers out there, it’s hard to find which one is right for you.

Chat To Our Financial Experts

If you’re using your renovation to improve the value of your home, having a loan is an acceptable way to get things underway. At One Stop Financial Solutions, we can take a look at your personal situation and your home renovation plans, while taking your finances into consideration. We do the hard work of finding the right loan option and lender for you and guide you through the steps. We’re here to help you weigh up your options and find the one that suits your financial goals.

Whatever your reasons for renovating, you’re going to want to start off by thinking about a plan for what will add value to your home. A well planned budget and the right choice of financing option could be what makes your dream renovation a reality. Talk to us today on how we can help add value to your property.

    Get our advice for free

    Great advice usually has a cost, but our expertise is free to first home buyers because the bank pays us! Banks pay us a commission because we are essentially doing all of the hard work for them. Most importantly we are strictly ‘unaligned’ which means we are not obligated to do business with one particular bank over any other, which means you’re always getting the best options and advice based on which bank is best for you.

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