When you’re thinking of renovating your property, it is extremely important to consider how you will fund the renovations, when putting your initial plan together.
Of course, there are many different financing options available, but it is finding the right solution for your needs that is the key.
You may find that you have built up equity in your home.
Equity is the difference between what the property is worth and how much is left owing on the mortgage. So, say for example your home is worth $300,000 and you have $100,000 left to pay on your mortgage. This would leave you with $200,000 in equity. By chatting with you mortgage broker about your plans you can work out what percentage of your equity you will be able to access to renovate.
Refinancing may be a better option for you to access funds.
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, now is a great time to consider your project.
Alternatively, you could also opt to fund your renovations via a construction or building loan.
A construction loan works in a similar way to a home equity loan except that the lender will not release the full loan amount to a borrower upfront, rather they would release it to you in stages as the renovation progresses.
In addition to construction loans, you could also elect to fund your home renovation by using a line of credit. Although, this is a slightly more complex type of funding as it lets borrowers access funds as they need them in order to pay for things like tradies or materials. It is also worth noting that with this funding method you’d be charged interest on the balance owing on your account rather than a total loan amount.
It is worth doing a bit of homework, to ensure you can finish your renovation plans and enjoy them.
As your local mortgage and home loan specialist in Mudgeeraba on the Gold Coast, we 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.
Give us a call on 5559 2563 or drop in and see us at Mortgage Choice in Mudgeeraba, just 5 minutes west of Robina Town Centre – Bell Central Shopping Centre.