3 Ideal Financing Options for Home Improvement

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Change is the only constant thing in life. Everybody likes to make changes in their lives, homes, and many other aspects but these material changes require money. Simple home changes bring joy and positivity. Putting up a painting on the wall or changing the floor carpet can add a lot of value to your home. These changes make you enjoy your space more and also give you a new experience. All of you have different choices for your homes. Some like theme-based interiors, while others may prefer pastel shades for their walls. Generally, home improvement requires a fair amount of cash. Many of you, irrespective of your will to make changes in your homes, are not able to due to lack of funds.

Along with the choices, another reason for different preferences is the size of the family. If your family is growing too fast, you need space to accommodate everybody comfortably.

Many people go for financial help in the form of loans to make the required changes in their existing homes.

The best loans for home improvement

Many banks and financial institutions offer loan facilities in the form of secured loans, guarantor loans, personal loans, car loans, and loans for Christmas, and many more.

But which is suitable to meet your demand for home improvement? In most cases, it depends upon the amount that you need and your current financial status.

Before applying for any loan, it is mandatory to go through the terms and conditions carefully. Following are the advantages and disadvantages to help you decide on the right type of loan for you.

Personal loans

Advantages

  1. This loan is best suited for you if you want to make minor home improvement as you can borrow small amounts.
  • The repayment terms are relatively flexible as you get a few months for your first repayment amount.
  • There is no security required.

Disadvantages

  1. In case you need to borrow large amounts, this loan is not for you.
  • Since the amounts to be borrowed are small, the interest rates may be high.
  • Although you do not need a mortgage, you will need a credit score for your loan approval.

Secured loans

Advantages

  1. If you are looking for significant renovations in your home requiring large amounts, this loan is for you.
  • In case of a low credit score, you are still eligible for a secured loan.
  • You may get a more extended period for your repayment proving to be a boon for you.

Disadvantages

  1. The loan amount may be dependent on your property’s value and your share in it.
  • In the case of non-repayment, your home is at stake.
  • £5,000 is the minimum amount which you can borrow at once.

Guarantor loans

Advantages

  1. Despite a bad credit score, a guarantor can be a saviour for you and get your loan approved.
  • No security is required for your loan approval.

Disadvantages

  1. It is challenging to get a considerable amount as loans.
  • A suitable guarantor is required for your loan approval.
  • In case of non-payment of your loan, your guarantor should be in a position to pay off your debts.

Loan Alternatives

Home improvement loan or credit card

A credit card is useful only when you want to borrow relatively small amounts. ‘Purchasing a credit card may prove beneficial to you as they offer a 0% interest rate for a promotional period, lasting between 3-20 months.

In case you make the full payment before this period ends, you are saved from the interest payment.

In case of non-payment within the required time frame, you will be charged the standard rate by the lender, which will be expensive.

A loan is a safer option than a credit card. If you are sure of paying the amount back within the promotional period, the credit card is the best option for you.

But if you prefer upfront costs, then the loan is the best option for you.

Ways to get a home improvement loan

Following are a few ways of getting a loan for your home improvement:

Be aware of what you want

It is essential to decide the required home changes and their effect on your property value. Conduct proper research to influence your decision.

Back up your research with proper evidence to decide, review your income, financial statements and expenses.

To borrow a loan, you should know how much you can afford to repay each month.

Prepare for your application

Nowadays, loan approval has become an easy process. You can apply it online or in person as per your convenience.

Space out your applications.

In case of buying more than one loan, take a gap between two. The credit score is an important factor considered in your loan approval process.

Applying for two or more loans within a short period may have an impact on your credit score. Lower credit score may prove to be an obstacle in borrowing a loan.  

Home improvement loan with bad credit

A bad credit score may affect the chances of your loan approval. But it is possible to borrow a home improvement loan considering the bad credit.

You may be offered with a lower limit loan with high-interest rates as it helps to reduce the risk of non-repayment.

With bad credit, you may also be asked for a mortgage or security, which may lead to losing your home as security.

If you boost your score, the chances increase of getting a loan quickly.

Manage your home improvement loan

Managing a loan is easy if you look at them in that direction. Managing your loans effectively will have a positive impact and will boost your credit score.

Automate your payment cycle to avoid forgetting them every month.

In case of a home improvement loan, keep track of your spending and manage your expenses keeping in mind the repayment of the loan.

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