Home renovation is a hot topic in today’s media landscape. Renovation reality shows have exploded in popularity, and the art of renovation has been taken to wild and sometimes comical extremes. Lost in the noise of fame and bright lights of national television, the humble renovation has become a fantasy for most, a task best left to energetic couples buzzing with 15 minutes of stardom and possible endorsement deals.
But it shouldn’t be this way! If you own a home, renovations can be fun, educational and, best of all, a smart investment decision. Renovation can increase a home’s value and your quality of life. Where some see a home as it is, some can see a home as it can be. So how can you change up your home and give it a new life?
Home a loan
Just as you found the best home loan to help you purchase your home, a loan can be taken out at a very reasonable rate to perform upgrades and renovations. Usually, this type of loan is called a personal loan; the rate of interest is calculated based on your income, credit history, length of the loan, and amount borrowed.
Even with the best credit history, a significant personal loan is going to be charged at least six per cent, which makes a $50000 loan quite costly in repayments, especially when we compare an average mortgage rate of four per cent. Is there another way to finance your renovations?
If only we could borrow money at the same rate as our mortgage. Well, good news for the keen renovators, we can! Refinancing your home loan is an excellent way of financing your renovations,and it can save you money in the long term. It is a good idea to check your home loan’s health every few years to make sure you are still getting the best deal.
Ok, so you want to refinance your home loan to make renovations, the process is pretty straight forward. Step one, find a new home loan! Obviously, you will be looking for a similar product to your existing loan, but it pays to search out extra features, low fees, etc.
Once you have found the perfect home loan, contact the lender and be honest about the extra money you would like to borrow for the renovation works. There are plenty of calculators out there to help you determine how much you can afford to borrow.
Now all that’s left to do is gather all the relevant documents, fill out the forms, and apply for the new home loan. Your (possibly new) lender will then start the process of refinancing. Be wary; this process can take a little while and attracts all sorts of fees. There will be a final discharge form, and your done!
There must be another way!
Refinancing a home loan may seem a little extreme for some small renovations, and it might be. Refinancing is an excellent way of freeing up funds and making sure you have the best home loan possible, but it might be overkill, especially if your current mortgage has a redraw facility or the capacity for a top-up.
Redrawing funds from your mortgage is an easy way to fund renovations, and it is favorable to taking out a loan as you are redrawing at a low-interest rate. A mortgage top-up is essentially adding more funds to your mortgage. Not all home loans are created equal, so ask your lender today if your home loan has these features.
What to add?
OK, with all the boring finance stuff out of the way, what sort of renovations should you do? Preventative maintenance is always a good idea, it might not be glamorous, but it needs to be done. A fresh coat of exterior paint can add value, protect your home, and doesn’t cost an arm and a leg. Other jobs like resealing exposed wood (like your deck or veranda) and keeping an eye out for termites keep your home fresh and liveable.
A refresh of the home’s interior paint breathes new life into the home and can add a lot of value. Similarly, a new kitchen is costly but can add huge amounts to your home’s resell value. These projects can be done with a little know-how and practice and can be rewarding and fun.
A new bathroom tops the list of must-have renovations, but it is also the most expensive job to undertake. Unlike a kitchen, a bathroom requires specialist knowledge to renovate and will usually require the expertise of a professional. Any functional room will be more expensive to improve but will also have the biggest effects on the home’s overall value.
Landscaping and yard work should not be overlooked when it comes time to renovate. Taming your outdoor areas can add extra living space and transform the feel of your home. My favorite room after renovating my home became the backyard! Tidying up the front of your home is cost-effective and has a big impact on first impressions, a big deal if you ever decide to resell.
The humble ‘home reno’ has gained somewhat of a cult status here in Australia, helped by glitzy TV shows like ‘The Block.’ Renovating your home should be personal. Forget the reality TV shows with huge budgets and hidden expert teams; real renovations take heart and passion.
If your beloved home is in desperate need of an update, there are a few ways of coming up with the dough. Personal loans are easily accessible, but you may want to ask your lender about other options like refinancing or redrawing form your loan.
Once you have finance, think about maintaining your home first and using some of your funds to perform preventive measures. This will save heartache later down the line, and a lot of cash. Improving your home is first and foremost about improving your life. Put your time, effort, and money into rooms that will give you the most back. Renovate your home for a rejuvenated you! Good luck!
Smriti Jain is the owner and senior content publisher at Financesmarti. Financesmarti is a website where she shares a lot of useful stuff for the people and business of India. This includes small business ideas and other banking information, as well. Smriti completed her education in science & technology from Delhi University. Smriti usually has interests in digital marketing now, and she has chosen this career for the full-time opportunity. The primary purpose of starting this blog to provide quality information on the banking industry to the people.