Renovating your home is an exciting prospect. However, it comes with a fair share of stressors, one of the biggest being the question of how you’re going to pay for it.
Before setting the details in stone, take the time to figure out what you can afford and explore the financial options available to you. 1. Credit card If you’re planning on carrying out a small home improvement project, you can cover your expenses by paying with your credit card. Keep in mind that credit card interest rates can be hefty. Therefore, make sure you stay on top of your payments. 2. Personal loan or line of credit Many people opt for personal loans to finance their home renovations because the interest rates are relatively low. Moreover, you can pay off the loan in several small installments over a fixed period of time. Furthermore, a line of credit is similar to a personal loan. However, you can access the money as needed and only pay interest on the funds you use. 3. Home equity line of credit This type of line of credit is secured by your home's equity, meaning it comes with a significantly lower interest rate. With a home equity line of credit, you can borrow up to 80 percent of your home’s appraised value, excluding the amount owed on your mortgage. However, setting up this type of line of credit may be subject to fees, so be aware of that before applying. 4. Mortgage refinancing You can also finance your renovation plans by refinancing your mortgage. This means that, instead of having a separate loan or line of credit to deal with, the funds you borrow for your renovations will be added to your mortgage payments. Although there are fees to arrange this, you’ll benefit from a low interest rate. 5. Financing upon purchase Like mortgage refinancing, you can choose to add the cost of planned renovations to your mortgage before even buying your new home. Like mortgage refinancing, this is usually only done for major renovation projects.
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From credit and debt counselling to filing for personal bankruptcy, D. & A. McLeod Company Ltd. is here to support you through your major financial decisions. Contact us at a location near you to learn more.