5 ways to borrow money for home repairs
When you own a home, the need for home repairs can arise when you least expect it. An emergency fund can help protect you from the resulting financial blow. However, if you don’t have a few thousand pounds of cash on hand, don’t panic when you notice a crack in your wall or your drain getting clogged. In today’s competitive loan market, it is relatively easy to find a lender to finance your home repairs.
Here’s a quick look at some of the best options for borrowing money to cover your home repairs.
1. Low interest or 0% credit card
For less expensive home repairs, you can go for the convenience of plastic, especially if you can pay off the amount quickly.
The best card in this scenario would be a card with a low introductory rate or even 0% for purchases. There are several 0% credit cards in the UK that are worth exploring. If you have a strong credit rating, your chances of getting 0% credit card approval are good.
However, it goes without saying that before taking out a credit card to finance home repairs, it is a good idea to first confirm your ability to pay on time each month and settle the balance before the introductory period ends. .
2. Home equity loan
If you’ve built up equity in your home, you can borrow money to finance expensive home repairs.
âHome equityâ refers to the difference between the current market value of your home and the amount you owe on your mortgage. For example, if the current market value of your house is Â£ 250,000 and your mortgage balance is Â£ 150,000, you essentially have Â£ 100,000 of home equity. You can use some of this money as collateral for a loan to finance home repairs.
One of the main advantages of home equity loans is that their interest rates are quite reasonable. Like credit card debt, however, these loans can be dangerous if you are not a disciplined borrower. You could face stiff penalties for late or missed repayments, the worst of which is repossession of your home. Late and missed payments can also lower your credit score. It may therefore be a good idea to develop a repayment plan before applying for a home equity loan.
3. Personal loan
A personal loan is another viable way to borrow money to finance expensive home repairs. Personal loans are offered by banks, credit unions, and savings and loan associations and are a quick way to earn money. With sufficient income and a decent credit score, you can get a personal loan in a matter of weeks.
A major downside to personal loans is that they come with high interest rates. However, different lenders will charge different rates, so it may be a good idea to shop around and compare the rates offered. Your regular bank may offer you, as an established customer, a better rate than another credit institution that does not know you. Also, if you are a member of a local credit union, you may be able to get a cheap personal loan.
The key to personal loans is to pay them off as soon as possible; Otherwise, the high interest rate could make your home repairs expensive.
4. Home improvement loan
Home improvement loans are available from banks and credit unions and have one main advantage: speed.
Other loans, such as home equity loans, take a long time to process, and it can take several weeks for you to get your hands on the money. Home improvement loans, on the other hand, do not require any appraisal and the paperwork is also minimal.
A possible downside to these loans is that the interest rates can be a bit higher than those for home equity loans. The repayment term can also be a few years shorter, resulting in higher monthly repayments.
5. Mortgage refinancing
Converting your old mortgage into a new loan is another option for financing expensive home repairs.
This option is especially useful if the mortgage interest rates currently on offer are several percentage points lower than your current mortgage rate and if you have significant equity in your home (if the current market value of your home is greater than the amount that you must) . The higher the equity in your home means that you will be able to borrow more.
Mortgage refinancing can also be a good option if the home repairs you undertake will actually add noticeable market value to your home.
Finding a lender to finance home repairs is quite easy today. Many lenders are ready – or should we say eager – to lend you enough to meet your home repair needs. However, what is difficult is sifting through the ever growing menu of options of these lenders to find out what is best for you. Each of the financing options available have their pros and cons, but if you carefully analyze your personal circumstances and financial needs, you may find one that is right for you.
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