how to finance your home renovation with a personal loan
07 February 2011
Big or small, home renovations have one thing in common: they can be expensive. Whether you're updating some tired interiors or adding on a few extra rooms, you're going to need access to ready cash to get the project finished.
If you have a renovation on the horizon, but you're not sure how to finance it, a personal loan might be just what you need. As with any banking product it's a good idea to weigh up all your options before deciding if it's right for you. Here's a quick pros and cons list to help get you started.
- a personal loan gives you ready access to all the money you need to complete your home renovation project. In most cases you can borrow from $5,000 - $50,000
- an unsecured personal loan generally attracts a lower interest rate than most credit cards and the rate may even be fixed for the duration of your loan
- using a personal loan to cover your renovation expenses means you can pay off the debt much faster than if you added it to your mortgage
- you don't need to provide any collateral or security to receive an unsecured personal loan. If you're eligible, the cash is yours
- your loan can be paid off quicker if you can budget for extra repayments
- certain types of renovations can add equity to your home
- loans that are successfully paid off will enhance your credit rating
- due to the lack of collateral, unsecured personal loans attract a slightly higher interest rate than a secured loan (where a security has been taken against an asset)
- the qualifying criteria for unsecured personal loans are a little stricter
Home renovations are stressful enough without adding the extra worry of finding the money to complete them. A personal loan can give you quick access to the funds you need to get your home project completed. Once you have the financial side sorted you're one step closer to living in your dream home.