Due to high home prices, high stamp duty fees, and a general lack of available properties, many homeowners decide to make improvements to their current homes rather than move. Your home can feel new by giving its inside a fresh coat of paint, remodelling your kitchen, or extending. The best ways to raise money for house improvements are listed below.
The simplest method to pay for house improvements is with your own savings, which is a more prudent choice than buying a holiday or a new car. Depending on their type, home upgrades could raise the value of your home by more than 10%.
Applying for a credit card could be a strategy to finance your restoration project if you only require a small sum. Some financial organisations provide credit cards with 0% interest that you can pay off in a predetermined number of months.
It’s not always a case of needing a new job or a higher salary to be able to improve your finances. For many people, it’s a case of just looking to manage your money better. Even if you feel there is no hope with your finances and there is no way of putting it right there are a number of things you can do.
Start by tracking your spending. If you don’t know where your money is going each month then there will be room for improvement. Categorise each of your spends so that you can identify those non-essential expenses.
Create a realistic monthly budget. Use what you’ve discovered by tracking your spending to create a budget that works for you and your lifestyle. No point in going cold turkey with your spending needs and making drastic changes that won’t be sustainable and that will make you miserable. You’re looking to make improvements after all.
are looking to take out a loan or second mortgage on your property to free up
some additional money for home improvements, a new car or something luxurious.
In that case, you may be wondering which option is best for you, a second
mortgage or a home equity loan.
A second mortgage
is a loan secured against your property. The total value of mortgages against
your home is usually 80% of its value, so the lender will only lend you up to that
amount. Your house also secures a home equity loan, but it doesn’t have any
limit on how much money you can borrow.
are more popular because they offer lower interest rates and extended repayment
periods than home equity loans. Interest rates on a home equity loan can be a
lot higher than a standard mortgage deal.
A bridging loan (also known as a Bridge Loan) is a short term loan that helps you bridge a gap in finances, for example purchasing a house before you have sold your current one. They are also ideal if you are purchasing a property via an auction and need the money immediately, again before selling your own home.
There are two types of bridging loans, an open one and a
A closed bridging loan has a fixed date for repayment and
tends to be used when you have exchanged contracts on a property but are
awaiting the sale of yours to complete.
An open bridging loan has no fixed repayment date but
lenders expect the repayment to be made within 1 year.
When taking out a bridging loan your home becomes security
in case you default on the payments.
Bridging loans are paid off monthly and have a higher
interest rate than mortgages.
Is your home in desperate need of renovation and you simply do not have the savings to fund it? One option you can try is getting a Home Improvement Loan. Planning on getting a big loan can be scary, but you can start with a few simple steps.
1. Research- do a bit of research to see the typical cost ranges for the type of renovation you are looking for
2. Estimate- come up with an estimate to the amount you would need, and add about 10% more, just to be on the safe side
3. Credit- evaluate your credit score and history to assess whether or not you would qualify for the loan that you need
4. Home Equity- sometimes you will need to know the equity of your home as lenders may want this information
5. Shop Around- do not settle for the first loan you come across, look at several to get the best one
6. Choose and Apply- choose a loan that will work best for you and apply
By using these tips, you will be very well set up to getting the Home Improvement Loan you need.
If you have heard about there being a new mortgage scheme announced with the 2021 UK Budget and are wondering what it means for you, then you may feel quite excited by the details. This new government-backed mortgage scheme has been put into place to help first time home buyers or current homeowners secure a mortgage with only a 5% deposit! The release of this scheme was on the 19th of April and will be in place as a temporary measure until December 2022.
With home ownership demands immense increase since 2020, the government is trying to help the dream of owning a home a reality. Statistics show that over two-thirds of private renters and those living at home want to buy and are starting to save up to make that happen.
Owning your own home is an incredible personal and life achievement that hopefully many more will now be able to experience with this onset of this government-backed mortgage scheme.
Home Equity Loans allow you to borrow/raise money, against the ‘equity’ of your home without having to sell it. Equity is the difference between the saleable value of your home and the amount left on the loan you have against it. For example, if your property is valued at £150,000 and you have £50,000 left to pay on your mortgage, the equity is £100,000. If your home is paid off, then the equity would be £150,000. So, equity is basically what has already been paid for the property.
A home equity loan, also known as a homeowner loan, is secured against the value of your home and is often used to consolidate debts or buy a car. An alternative is home mortgage refinancing, where you usually increase you mortgage, taking all or some of the extra borrowed cash. You should be cautious when securing additional debt against your home as it could be repossessed if you do not keep up the payments.
Home Equity Loans vs HELOC
Continue reading “What is the Difference Between a Home Equity Loan and a Home Equity Line of Credit?”
As more and more homeowners look to use their home equity as an option for low-interest financing, it can be confusing to know if a Home Equity Loan or a Home Equity Line of Credit (HELOC) is the better option. Both are secured by your home and offer rates that are lower than unsecured loans or credit cards and may offer tax benefits depending on how the loan is used. Both can be good solutions to finance a variety of uses including home improvement, debt consolidation, major expenses (weddings, education, etc.), and refinancing. However, there are differences to understand so you can select the right option for you.
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