Australians are a house proud bunch. Around six out of ten home owners undertake home improvements each year. And it can a great investment. Renovations can improve your lifestyle and the value of your home. If you’re planning some eco-friendly renovations, the project can even help to trim household utility bills.
When it comes to the cost of renovations, the sky can be the limit. But interestingly, only around one in five (17%) home owners spend more than $5,000 renovating or extending their homes.
It goes to show how we often prefer to focus on relatively minor repairs/alterations, and research confirms that painting, new floor coverings and plumbing or electrical work are the most popular projects.
A renovation loan is worth considering
When it comes to paying for a renovation, it’d be ideal to use cash to foot the bill. However, we don’t always have a lazy $5,000 or so that we can tap into. Even if you do have the savings available, it can make good financial sense to avoid dipping into the funds. That way you can preserve ‘rainy day’ money for emergencies.
Realistically, some home owners simply don’t have the luxury of time to save for renovations. If you have a growing family for instance, an extra bedroom can be an immediate must-have.
One way to finance a renovation is by extending your home loan. The thing is, there can be good reasons to consider a separate personal renovation loan. For a starters, the fees associated with refinancing or topping up your home loan can be disproportionately high, especially if you’re planning a reasonably small-scale project.
Home renovation loans can work out cheaper
The beauty of a renovation loan is that you have the freedom to select the term of the loan – 5-7 years is typical. That’s much shorter than the average 25-year home loan, and this can provide valuable savings on interest.
In some cases, home owners just prefer to use a separate loan for renovations to help keep track of what the money is being spent on.
A personal loan can also have fixed repayments, which can be easily slotted into a household budget. The set term provides a clear end date for when the balance is paid off – something that is a real plus over credit cards, where you could end up paying off the debt over a far longer period than anticipated.
Which home improvement loan is right for you?
Just as you probably spend time checking out the different materials and finishes that are right for your renovation, it’s important to be sure you have the personal loan best suited to your needs.
Your Mortgage Choice broker can help you track down the personal loan that matches your lifestyle and budget to make your renovation an all-round success. To learn more about how personal loans work, click here.