Since purchasing your dream home years ago, you may have noticed changes are needed to bring the property up to date - such as the colour scheme and the fittings. Or, you may want to make structural changes so your property better reflects your current lifestyle, such as building an extra room, installing a walk-in wardrobe or decking.
If completed correctly, renovations can optimise the potential of your home or investment property. The good news is there are a variety of loans available to help homeowners ramp up their renovations.
If you are simply planning to refresh your property with a new coat of paint or fit new fixtures, you may want to consider a personal loan. The usual repayment period is between five and seven years. This type of loan often includes no fees and there is no security required, meaning your home and assets are not at risk. The interest rate is often higher than your mortgage’s interest rate, however.
Consider a mortgage ‘top up’ instead - remembering the extra money loaned will be stretched over the entire loan term. Try making higher repayments, as if you were paying off the personal loan as a separate debt alongside your usual mortgage repayments.
If your renovations are complex and require structural changes (e.g. a new bedroom) and they require Council approval, a construction loan may be worthwhile.
A construction loan finances the construction of part, or all of a dwelling, and the funds are drawn down over time as the structure is built, rather than in one lump sum. These draw downs are sometimes referred to as ‘progress payments’, and the lender usually sets a time limit on the draw down period.
Alternatively, you may want to take out a second loan. Your lender will make progress payments and once the loan is fully drawn down, you then have an option to consolidate your loans.
If you are unsure how you could afford it, consider using your mortgage facility. Mortgage Choice Brokers Doncaster can sit down with you to discuss your options and review the nuts and bolts of your current loan.
Borrowing a little extra now to complete some cost-effective renovations is a great way to add value to your property in the long run.
Talk to us today to find out how you can finance your home improvements on 03 9858 4755 or email@example.com