June 08, 2016
For those local home owners who are thinking of renovating their property, it is very important to consider how you intend to fund the renovations, when putting your initial plan together.
Of course, there are many different financing choices available, but it is finding the right solution for your needs that is the key.
For instance, you may find that you have built up a certain amount of equity in your home which you could access to fund your renovation. Equity is the difference between what the property is worth and how much remains owing on the mortgage. So, say for example your home is worth $500,000 and you have $200,000 left to pay on your mortgage. This would leave you with $300,000 in equity.
It is important to note however, that the amount of equity a borrower can access depends on how much the lender will let them borrow. So you’ll need to prove that you can service any increase in debt – Essentially, just because you have $300,000 in equity, doesn’t mean you will be permitted to borrow all of this to fund your renovations.
Another way you could fund your renovations is through refinancing. By refinancing your mortgage, you may be able to borrow more money to help fund your renovation plans. And, with interest rates currently sitting at all-time lows and Australia’s lenders hungrily vying for business, refinancing could be an ideal solution for some borrowers.
Of course, these are merely a few of the finance options that may be available to you when renovating your home, which is why it is extremely important to do your research and investigate which option will best fit your needs.
In fact, this may also be a good opportunity to shop around and compare your loan to the hundreds of others to see if there is one offering a better, well suited option. If you have had your loan for a number of years it may be possible that a new loan structure will result in savings meaning the new repayments may be very similar to your current repayments - even with any extra borrowings you may have to take out to cover the cost of your renovations – and you may be able to get a better deal on interest rates and fees.
The team at Mortgage Choice, will be able to talk you through your options and help you to decide on a plan of attack that is best suited to your individual situation.
They will do all the leg work for you, researching and comparing your loan options from up to 25 of Australia’s leading lenders, to find a product that is most suited to your current needs and goals.
The best part is that Mortgage Choice brokers offers their home loan service for free, and are paid the same commission rate by lenders regardless of the lender of loan product a new customer chooses. This means that they are always working in their customers’ best interest.
For more information contact John Costa on 0403 250 275 or visit MortgageChoice.com.au/john.costa