Are you planning to renovate your home this year? Whether it’s a fresh lick of paint, new kitchen cupboards or a loft conversion, renovation costs time and money.
Make sure to thoroughly research tradespeople in your area and research any extra costs that may come into play. Instead of asking for estimate prices, request exact quotes for products and services.
In a 2019 annual homeowner survey, nearly four in ten homeowners put off renovations because of financial reservations. Fortunately, there are a whole host of options when it comes to funding a home renovation.
As a general rule, using cash savings to fund a renovation is always better than borrowing money. In fact, 89% of 25–39-year-olds opted to use their cash savings for home renovations started in 2019.
However, if you need to borrow money for a renovation, it is best to identify the cheapest way of borrowing over the shortest time period. Short borrowing periods can reduce your chance of mounting up debt over the years.
Credit cards were the second most popular funding option for home renovators in 2019. Consider getting a credit card that offers 0% interest on balance transfers and purchases. A credit card can also provide additional protection if your tradespeople go out of business. However, in 2019, only 24% of millennials used credit cards as a funding method.
Cash from a home mortgage refinance
Using your mortgage for home improvements can be a cheap way to fund renovations. Re-mortgage is a great way to increase borrowing and get a better deal. Ensure you aren’t tied to any special terms or reduced rates that may come with early re-payment charges.
Consider switching mortgage providers to save money and reduce the risk of a bigger mortgage. Or, if your home has increased in value since you bought it, you may be able to borrow a further advance from your mortgage lender.
Gift or inheritance
Fund your renovation with any inheritance or gifted money. In 2019, this was the least popular option for funding renovations.
Cash from a previous home sale
If you have just sold a previous property, consider using that cash to improve your new property. In 2019, 40-54-year-olds accounted for 42% of renovating homeowners. The top three rooms to renovate were the bedroom, kitchen and bathroom. These rooms are at the heart of the home and can add significant value to any property.
Invest in some fitted wardrobes in the master bedroom to add a sleek and organised feel. New buyers will value the added storage, especially if your bedroom is on the smaller side. Or renovate your kitchen with new cupboards, door handles and a fresh lick of paint. Try to stick to a neutral colour palette to brighten up your home and appeal to a diverse range of buyers.