How to Finance Improvements for Your House with a Home Renovation Loan
Home improvements can serve many different purposes. Some people purchase homes with the intent of improving them over the years to help raise the overall value of the home. Some people make renovations as they age to make it easier to get around the house. Other reasons include staying up to date with style and improving one's lifestyle. No matter the reason for your home improvement project you may want to consider a home renovation loan.
There are many ways to finance home improvement projects through alternative funding or home renovation loans.
This type of funding is common for DIY projects. People will save up the money over time. For example, if you wanted to overhaul the kitchen, you save up for each appliance or large purchase one at a time and then complete that piece. This method often takes a really long time depending on your cash flow
Credit Card or Store Card
Using a revolving credit card with a high interest rate is acceptable for smaller projects that will take you a month or two to pay off. This should not be your first choice for a large project which is a benefit of a home renovation loan.
A personal loan can count as one of the formal types of home renovation loans. A personal loan will have a lower interest rate than using a credit card. A personal loan is suggested for people with good credit and little to no equity in their home.
If you have equity in your home and the disposable income to add mortgage debt, a second mortgage will carry a lower interest rate than your credit cards. A second mortgage is a loan that is granted using your home equity as collateral. Out of the home renovation loan options, this is one of the better choices.
Home Equity Line of Credit (HELOC)
Obtaining a HELOC from your bank will be harder than getting a second mortgage, but they are an excellent home renovation loan option if you have a large project and rough estimates for the final product. For example, if you are replacing the siding on your home and the workers find that the north side of the house is rotten, the project becomes more significant and more expensive. With a HELOC you don't have to worry about where the extra money is coming from as long as you have not spent up to the limit on your HELOC.
Get Ready to Renovate!
If you're eager to get started on your renovation and are in the need of a loan, contact Dominion Lending Centers in Edmonton to help you understand what type of home renovation loan is best for your next project. Give us a call today!Request Mortgage Info