Whether you’re a first-time homeowner or a seasoned pro, home repairs and renovations are a guaranteed part of the package. In the last 12 months, UK homeowners have spent £39 billion on home improvements, according to Checkatrade’s Home Pride Index. For the year 2020, the average spend for home improvements hovered at around £2,700 – an increase of 12 percent from 2019. Over time, you may find that your roof begins to leak, your kitchen needs updating, or you’re faced with an urgent home repair you simply cannot put off any longer.
The cost of your home renovation can vary greatly according to the nature of repairs, time and extent. While it’s always recommended that homeowners maintain a home repair fund, sometimes you may need to consider additional financing to complete the project. With low-interest rates and ever-increasing financing options on the market, homeowners now have a good range of home renovation financing options to choose from.
Put It On A Credit Card
One of the go-to ways to pay for your home improvements is to use a credit card. The trick here is to avoid getting overwhelmed with the higher interest rate charges. To do this, apply for a credit card with promotional 0 percent introductory periods or balance transfer promotions. This gives you an allotted time to repay the cost without having to worry about high-interest costs. Alternatively, you could combine your savings and the use of a credit card to cover the entire cost of your home renovation.
Apply For A Home Improvement Loan
Some home renovations like the addition of a bedroom or extension can add significant value to your home’s market price. According to research by Nationwide, the addition of a double bedroom could add as much as 23 percent to your home’s resale value. However, they can also come with a larger price tag – a single-storey bedroom extension can cost £16,000. Another way to finance more capital-intensive renovation projects like this is to apply for a home improvement loan. A home improvement loan is an unsecured loan, so will generally come with higher interest rates than mortgages. However, they are still judged based on factors like your credit score and affordability. To get an idea of the interest rates you may be offered, a home loan calculator can help. It takes into account your loan amount, repayment schedule, and financial circumstances.
Capitalise On Your Built-Up Equity By Remortgaging
Some home renovation projects like replacing your kitchen or roof can cost much more than you can afford to put on a credit card. For instance, according to PriceYourJob, the average cost of a new kitchen hovers at around £4000 to £10,000 to supply, and up to an additional £2,000 to fit. In this case, you could consider remortgaging to minimise the cost of borrowing. In some cases, remortgaging can work out cheaper than using a credit card or applying for a home improvement loan. According to a study by Habito, one third of homeowners say they plan to remortgage to fund their home renovations. With interest rates still low in the UK, it could be the ideal time to capitalise on remortgaging.
However, before you choose to remortgage, there are three things you need to consider. Firstly, consider the amount of equity you have built up in your home. The greater equity you own, the easier it is to borrow against it. Also, if the value of your property has increased exponentially, your borrowing power will have increased. Finally, think about your personal finances, including your income stability, credit record, and job security. These will influence the interest rates you are offered in the end.
There is also always the option of saving up for your home renovations instead of relying on credit. If you do use savings, you get the bonus of no interest and financing fees. However, if you find yourself in an urgent situation and need to get your home renovations done ASAP, these options are a great place to start.