Regardless of whether you are remodelling an entire house or renovating only a portion of it, you need to consider your options on funding the project. It is great if you already have adequate finances for the home renovation. Otherwise, it is highly critical to choose the perfect financing company that can better provide you with your funding needs.
The complexity and the length of the project will determine the amount you require to borrow. You can either pick a long-term or short-term loan. When you plan on choosing longer payment terms, keep in mind that you will have to pay more for the interest, despite the lower monthly payments. For your added information, here are several financing plans you can choose from.
1. Secured loan – requires a collateral or security to ensure repayment of the requested loan. The assets placed against this type of loan will then be repossessed by the lender should the borrower fail to make payments.
2. Unsecured loan – also known as the personal loan, does not require any property as collateral. However, interest rates can mean higher for this type of loan.
3. Home equity loan – the process of borrowing against the equity of your home. This type of loan can provide you with a lump sum to pay for your home improvement project. Obtaining a fixed rate can make repayment much easier. In the case of non-payment, your home will be repossessed.
4. Home equity line of credit – works by giving you an open credit line. However, this does not have a fixed rate, so interest rates greatly depend on market conditions.
5. Home improvement mortgage refinance – has a fixed rate and allows the borrower to use extra money for home renovation. Usually, the payment terms can be up to 20-30 years or equal to your mortgage term.
6. Bank loans – usually used for small projects since they have to be paid off in just a short period.
To obtain the best financing plan, estimate your final costs first. Consider all the possible expenses, add up all associated costs, and always provide for unexpected expenses. Getting quotations from several financing companies will help you choose the best lender to assist you. Determine how much monthly payment you can afford and be honest with yourself. Most importantly, choose the company that is known for its fair rates and genuineness to clients.