The first thing that you have to look into when you are planning for a renovation is funds. The source of funding that you choose depends on the level of renovation that you are planning on. The following are the ways in which you can fund yourself for your home renovations or improvement plans.
The best way to get your job done. Cash is an option when you have adequate funds to take care of your expenses or if your plans are small enough to fit into your budget. There will be no stress of making payments in the future. It is always the safe way to play the game.
If your construction plans big and you are comfortable enough to borrow and pay them back in the desired installments, you are fit to go for this source of finance. But before you go for the loan make sure that this is the only option available. Construction loans can be quite expensive at times.
This is one source that comes out of a triangular relationship. If you are in link with a contractor who in turn has good relationships with reliable finance companies, then these contractors can act as a bridge and help you source your funds. The benefit is that the contractor will understand your need and will guide you accordingly.
Depending on the credibility of the client, banker allocates credit facilities. You can pull in anywhere, use it and later pay it to the banker, for which you will incur some meagre interest charges. A credit card is the next preferable means if you think cash is not the easiest option. By using credit cards you can simply save yourself from the complex loan process.
Looking for something cheaper than construction loans? Then, home equity loan is the feasible option. The loan period expands from 5 years to a good 30 years. Of course, you are not going to pay something for 30 years just because you wanted to improve the look of your house. Here you borrow fixed amounts and you pay back fixed amounts. So you need not have to worry about rate fluctuations.
If refinancing is one of the things that you are applying for, then it is wise to avail it. But the only thing that you have to make sure is that your renovation stands for a reasonable period. There is no point in repaying a loan for 2 years and your improvement plans are only for 3 years or so. You are visibly making a loss here.