When it comes to renovating their homes, every homeowner’s reason is different. Some people want to improve their comfort or need to fix safety issues such as cracked or broken floor tiles. Others may want to add more rooms for guests or make the home more kid-friendly to accommodate the needs of their growing family. On the other hand, some individuals consider home renovations as an investment for the future. For example, a homeowner may want to make the space more attractive and valuable when they sell it or rent out the property to long-term residents or vacationers.
Regardless of your objectives for the home renovation, you still need to consider an important factor—how you plan to fund it. Establishing this early on ensures that you can make the changes you want and that you avoid making costly mistakes.
If you haven’t gone this far in your planning process, here are practical ways to finance home renovation projects, no matter what your current financial status may be:
Save Up Some Funds and Pay in Cash
The most logical and popular way to fund your next home renovation is to save some money for it. When you pay for the renovations in cash, you have no other financial obligation to think about compared to taking up loans. However, you’ll need to work harder to come up with a sufficient amount. This might mean you’ll need other sources of income.
Depending on your current savings and other earnings, you might need to hold off renovating your home until you’ve saved up enough cash, which realistically might take years. If you aren’t in a hurry to start the renovation, saving up for it is a good route to take. Otherwise, you might need to use other methods to supplement your budget like getting a cash loan online.
Get a Personal Loan
If you need to immediately start the renovation but don’t have sufficient funds, you can supplement your budget with a personal loan. You can get one from banks or government institutions; just pick one that you can more easily manage. The best thing about applying for a personal loan for home improvement projects is it’s simpler and cheaper. Typically, personal loans don’t need appraisals which often come with other fees to get approved.
Personal loans also have shorter repayment periods than other types of home improvement loans. You can borrow money and pay it off in a year or up to five years, so you can be debt free sooner rather than later. Additionally, a personal loan allows you to borrow smaller amounts. Depending on the lender, you can borrow as low as Php 10,000, which is perfect if you only need to do minor home repairs or upgrades.
Use Your Credit Card
Other than contacting your bank for a personal loan, you can also fund your next home renovation project using your credit card. This is great if you only have a small project to tackle, such as buying new appliances or upgrading your kitchen. Also, using your credit card can have a few advantages. For example, the funds from it are readily available so you don’t have to fill out application forms to get the money you’ll need. All you have to do is swipe your credit card to purchase the materials you need and you’re good to go.
Additionally, some credit cards have 0% interest offers with select partner appliance and home improvement stores. This means you can pay for your purchases at a monthly term without any additional interest, so make sure to watch out for such deals.
Note that while you can pay for the materials using your credit card for the project, you’ll likely still need to pay your contractor in cash. You also need to think about your ability to pay off your credit card balance after your purchases. Other than those considerations, using your credit card to increase your home improvement budget is a viable option.
Apply for a Home Equity Loan
Although getting a personal loan and using your credit card allow you to do plenty of home improvements, applying for a home equity loan is a better choice when it comes to major renovation projects. A home equity loan is essentially a second mortgage with your property as collateral. You can apply for it through banks or government institutions and the amount you can borrow depends on the current market value of your home.
Because you’re using your home as collateral, you have a higher chance to get approved for larger loan amounts when you apply for a home equity loan. However, this can also be a disadvantage. If you fail to repay the monthly amortization, the bank may seize your property. That said, if you can manage the payment terms and interest, a home equity loan might be the best choice when you need to add rooms to your home, redo your kitchen, or enhance the outdoor space.
Unless you have an unlimited budget, consider any of these methods to fund your next home renovation projects. You can follow one option or combine a couple of these recommendations to make funding your home improvements more manageable. Either way, whichever you choose can help you successfully enhance your home and make it more comfortable.