The burning question on the minds of many Australian homeowners is – will I “Renovate” or “Relocate”? So, if you are one of these home owners, you may have also realised that the high cost of purchasing a new home and selling your current home far outweighs the challenges of renovating your current home. However, you should only renovate if the renovations will:
>> Add value to your home
>> Result in an improved standard of living
>> Be used to perform emergency repairs or full home extensions
Do Lenders/Credit Providers impose Restrictions on the Type of Renovations?
Subject to their credit policies and lending guidelines, most lenders/credit providers will let you borrow the funds to improve the value of your home for any worthwhile purpose, such as if you need to:
>> Add another bedroom, or any other room
>> Renew/update your bathroom or kitchen
>> Add a pergola and outside recreational area
>> Install a swimming pool
>> Extend your garage from a single garage to a double
>> Construct a secondary dwelling on your existing property
>> Any other structural or non-structural Kriandr construction
What Methods of Finance can I choose?
Here are some examples of the popular methods to ensure easy home renovation:
Home Equity Loan – This financing arrangement is perhaps the most common way for Australians to finance their home renovation projects. A home equity loan works where you borrow the money against the value of your home. To illustrate this I have provided the following example:
>> The example assumes your home is worth $700,000, and
>> Your mortgage loan is $300,000
From the example illustrated above, you will have $400,000 equity in your home, which you can use to fund your renovation project.
The recent rise in-house prices has resulted in many Australian homeowners having acquired considerable equity in their property, this can make getting a home renovation loan easier for these people and reduces their need to dig into their own cash reserves.
Personal Loan – This financing arrangement is a suitable option for you to consider if:
>> You do not have any equity available in your home, or
>> You only have to complete some minor renovations
By choosing a short-term personal loan, you will find that:
1. The personal loan interest rate is much higher than a home equity loan, and
2. You may be limited to the amount you can borrow (e.g. from $5,000 to $50,000)