Who wouldn’t love to renovate their home on a budget? Most of us would love to be able to afford a significant home renovation, but it’s not the easiest thing to achieve mostly due to the costs involved. This is arguably the biggest issues you might face when renovating your home. You don’t want to run out of money mid-renovation, but it’s also difficult to determine how much a renovation is going to cost.
Sure, you can speak to contractors and ask for advice, but at the end of the day, a renovation isn’t going to be a set cost and you should always be ready to pay around 10 to 20% more based on the contractor’s services. In most cases, you’ll end up paying the quoted amount and not a penny more. However, there may be some circumstances where you’ll have to pay a little more due to the availability of parts or extra labour costs due to circumstances that are out of your control.
But what exactly does it take to fund a renovation like this? How do people get the money to pay contractors to do complex renovations that can overhaul the entire home?
Use your credit card
The first option is to just use your credit card. We usually don’t suggest using lines of credit for something like a luxury home renovation, but there are times where it can be considered an understandable purchase. For example, if your home recently suffered through a natural disaster, then you may want to consider using a credit card so you can afford to pay for a renovation since it does count as an emergency.
Consider an equity release
An equity release allows you to unlock the monetary potential in assets such as your property. This is a fairly complicated subject, so we suggest looking at this site to learn more about the pros and cons of equity release and what it’s typically used for.
Look at your options for a loan
Loan options can be a few and far between, meaning it’s important to do your research and look at the different interest rates and loan amounts. Do a bit of rough math to calculate how much your renovation will cost and see if it matches the loan amounts that you’re being offered elsewhere. If they match up, then it’s a great opportunity to take out a loan. Otherwise, you may want to think twice about taking out a loan for a renovation, especially if it can’t cover all of the expenses and contractor fees.
An unsecured loan is a popular option for home renovation costs because it’s not secured against anything. You simply apply, pass the relevant checks then you’re given a large sum of money to do whatever you want with. Of course, you do need to pay it back, but you can arrange that after the fact. Unsecured loans tend to have a higher chance of acceptance because no extra checks are needed to determine the value of something.
A secured loan is a bit more worrisome for people because it typically means the loan is secured against your car or even your home. However, it does typically offer better rates. If the option is available to you and you’re confident that you can pay it back, then a secured loan is perhaps the best option for funding a home improvement. It also doesn’t take as many background checks as there’s something clear and tangible to be used as collateral.
Dig into your savings
Digging into your savings is the go-to choice for emergency funds for most people. However, it requires you to learn how to save money and keep it for something more important in the future. Most people save money without really having much purpose, but if you save your money knowing exactly what you’re going to be using it for, then digging into your savings can be a good option for paying for a luxury expense.
Fund it with money from your family
Lastly, you can always rely on the bank of mum and dad or ask relatives to help you out with funding. This is generally a last-resort option as you typically don’t want to drag other people into your debt unless they somehow benefit from it as well. Most people would feel a little embarrassed at the idea of relying on friends and family members for a loan, but it’s a perfectly normal way to help you fund something more expensive.