Getting the best from your home means occasionally renovating it. Doing so will help you to enjoy life while you’re actually in the building, and protect your investment. The money you put into renovations and maintenance, often, will pay for itself when you come to sell the asset.
But exactly how do you approach the project of a home renovation, and how do you fund it? Let’s take a look at what to think about.
Embracing the Home as an Asset
We’ve already used the word ‘asset’ to refer to the home. But many homeowners don’t think of their property in this way. This can cause them to leave many options on the table when it comes to extracting value from the building itself. For example, you might fund a renovation project by seeking secured loans, with the building itself acting as collateral. Or, you might take out a larger mortgage than necessary, in order to finance improvements or even expansions of the building you’re considering investing in.
Funding Big Projects: When It Makes Sense
It’s fair to say that some prokects make more financial sense than others. Conservatories, energy-efficiency upgrades, and garage conversions might all result in a tangible uplift in value that justifies the money you’re spending.
Before giving the green light to any project, you might think about how you’re going to pay for it, and whether additional finance is going to be worthwhile in the long term.
Balancing Benefits and Risks
To decide whether borrowing is worthwhile, of course, you’ll need to have an idea of the advantages and disadvantages of your chosen form of finance. In the case of a secured loan, the obvious upside is that you’ll enjoy a lower interest rate. You might also be allowed to borrow more, which can make certain renovation projects viable.
On the other hand, there’s a new form of risk that enters the equation when you take out this form of finance: in the event of a default, your home may be repossessed. As such, it’s a good idea to form a plan to make sure that this doesn’t happen.
Making It Work for You
Getting the best from a secured loan often means shopping around. Don’t settle for what you’re offered by the first creditor you approach. It’s also worth factoring in the long-term cost of interest, and whether that interest will vary based on the base rate set by the Bank of England. In some cases, your home improvements might be made viable by a government grant. For example, you might seek out additional insulation to drive down your home’s energy bills.
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