Home Renovation Loans
Home renovation loans or mortgages are designed for those buying a home as well as those wishing to refinance in order to improve an existing home.
The loan itself is required to reflect in an improved valuation for the home.
Some financiers will require proof that the loan was spent on improvements. Some banks may only release loan monies as invoices for completed works are submitted.
Demand for loans for home renovations is high and leading banks will require valuations before making the loan.
There are four ways of obtaining home renovation loans.
- You can refinance your home with an existing bank.
- Look at obtaining a new loan or second loan.
- Use the withdrawal facility in an existing loan.
- Establish a line of credit.
- It is essential that you budget properly for a home renovation, allow for all costs and then a little extra.
- Finance options are usually restricted to adding the cost of the renovation to an existing of new home loan.
How to help make sure you obtain that renovation loan for you home
Carefully plan and cost the renovation. A little detailed planning will assist with obtaining bank approval.
Do your homework in relation to valuations. Try to get a realistic estimate of how much your renovation work will actually increase the value of your home.
Do not be tempted to over capitalise. Spending to much money on a home, with little hope of recuperating it can cause financial problems if you need to sell.
- If you are about to start a renovation, and you have a home loan you must inform your bank.
- You may be required to increase insurance cover
- A personal loan might be easier, but it may be more expensive.
- Consider the extra time it may add to the home loan.
- Consider the cost of extra repayments and the possible increase in loan rates.