The burning question on many Australian homeowners’ minds is: should I ‘renovate’ or ‘move out’? So if you’re one of these homeowners, you’ve probably also realized that the high costs of buying a new home and selling your current home far outweigh the challenges of renovating your current home. However, only if the equipment:
>> Add value to your home
>> Improve living standards
>> For emergency repairs or whole house extensions
Does the lender/lender impose restrictions on the type of renovation?
Depending on their credit policies and lending guidelines, most lenders/lenders will let you borrow money to increase the value of your home for any meaningful purpose, for example if you:
>> add another bedroom or another room
>> Freshen up/update your bathroom or kitchen
>> Add a pergola and outdoor entertaining area
>> Install swimming pool
>> Expand your garage from a single garage to a double garage
>> Build a second home on top of your existing home
>> Any other structural or non-structural building
What financing options are there for me?
Here are some examples of popular ways to ensure a hassle-free home improvement:
Home Equity Loan – This financing arrangement is probably the most common way Australians finance their home improvement projects. A home equity loan works by borrowing money against the value of your home. To illustrate this I give the following example:
>> This example assumes your home is worth $700,000, and
>> Your mortgage is $300,000
From the example above, you would have $400,000 in equity that could be used to fund your renovation project.
Recent increases in house prices have led many Australian homeowners to build significant equity in their properties, which could make it easier for these people to get home improvement loans and reduce their need to dip into their own cash reserves .
Personal Loan – This financing arrangement is a suitable option for you to consider if:
>> You have no possessions in your home, or
>> You just need to do some minor renovations
By choosing a short-term personal loan, you will find:
1. Personal loan interest rates are much higher than mortgages, and
2. You may be limited by the loan amount (for example, from $5,000 to $50,000)
Construction Loan – This financing arrangement allows you to complete major renovation projects that require council approval and the services of a licensed builder. Lenders/lenders will place the following restrictions when considering construction loans for home improvements:
>> The lender/lender will not provide you with the full loan amount in advance
>> The lender/lender will only release the funds to you in phases as the renovation progresses
Can I afford to rebuild my house if it is destroyed?
You should already have normal home and buildings insurance, but you must add home insurance to cover costs associated with home improvement projects. So if your home has been destroyed by fire or some other natural disaster and cannot be rebuilt, ask yourself the following questions:
>> Do you have home insurance?
>> If you have taken out home insurance:
1. Is the insured amount sufficient?
2. What does your home insurance cover?
3. Does your insurance plan cover total replacement or sum insured?
Don’t wait any longer, act now
Therefore, if you are considering renovating your home stress-free, you should seek advice from a professionally qualified and professional home finance broker who are experts in home renovation loans and are offered by many homeowners who are considering renovating their property.
He/she arranges the financing of your renovation project. After preparing a budget for you, a mortgage advisor will provide you with a wide range of financing options and products. However, keep in mind that you need to be clear about your future plans as this will help you choose the right financial solution.
Now that you have read this article, I sincerely hope it has helped you understand the easy ways to renovate your home with a professionally qualified professional financial broker.
