Like many homeowners, you might be drafting some plans to do some home improvements to bump up the value of your property. While home improvements can certainly be a smart move, there’s one major drawback to them: they get pretty expensive! If all your planning and budgeting is more or less finalised, and now all you need to worry about is paying for the project, then read on to discover the best ways of financing your home improvements…
Take Out your Savings
If you have enough in savings to cover the cost of your planned home improvements, and you’re not setting this money aside for anything else, then using your savings is probably the most sensible option you have. However, this all depends on the way you’re holding your savings. For example, if your savings are tied to a fixed rate bond, it may not be worth taking the associated penalty just to get the cash out (if you’re able to access it at all!) You also need to bear in mind that if you’re withdrawing funds from a cash ISA, you’ll have no way of topping up your allowance within the same financial year. Furthermore, if you pay for the whole project with your own money, you’re not going to have much protection if things go wrong, for example the contractor’s’ company going bust or even turning out to be cowboys.
Use a 0% Purchase Credit Card
Credit cards have a distinct edge over using your savings, as if the work turns out to be faulty, or gets left incomplete, you’ll be able to claim the money you lost back from your issuer. This holds true even if you’re only using the card to pay for the deposit, provided the total bill doesn’t exceed £60,260. Once you’ve made the purchase on your card, this form of protection is locked in. If you don’t have the money to clear your balance, consider looking for a card that has an introductory charge of 0% on purchases. This interest-free period will make it so much easier to clear the cost (ideally through a direct debit). Check out the parameters of your current card, and start looking into introductory offer cards that you can qualify for.
Use your Home
You might be literally sitting inside the finances you need to make your home improvement dreams a reality. If you’re planning on a big extension, it’s usually worth approaching your mortgage lender, and seeing if there’s any possibility for you to free up capital with a further advance. While equity release schemes can be the perfect solution for many people looking to do some home improvements, borrowing money against the value of your house obviously isn’t a decision you can take lightly. The funds you want may not be offered at the same rate as the remainder of your mortgage, for example, and may even lock you in for a given period. If this doesn’t add up with any existing rules that apply to your main mortgage, then things can get very messy when you try to renew your deal. Consider this option by all means, but know what you’re getting yourself into!
Get a Personal Loan
Another popular option for funding home improvement projects, particularly the more expensive ones, is personal loans. If you want to carry out a loft conversion, add a new room onto the home, or do something equally large and complex, you can expect to pay upwards of £10,000. In these situations, a personal loan could be the best way to fund your vision. There are many different options in terms of lenders you can explore, so don’t just grumble about the money your home improvements are costing you, and take your time shopping around. Some personal loans can have an APR as low as 5%, applying to loans of up to £15,000. It’s also important to check out options for the repayment term, and choose one that suits you comfortably. Of course, APR rates tend to go up with the amount of money you wish to borrow, but there’s almost always a more sensible option out there, as long as you’re willing to do a little digging. If you go to your bank and jump on the first offer they put on the table, you could wind up paying much more for your home improvements than you need to!
There you have four of the best ways to finance your home improvements. Choose wisely, and you’ll be well on your way to the projects you’ve been dreaming of!