How to Pay for Remodelling of a Home

When you opt for remodelling your home, you should be mentally prepared to pay through your nose. Although you may try to avoid this because of the high costs, you must also remember that renovating has its own benefits; the most important one being the high resale value. When you renovate your home, you also increase the quality of your life and most of the times this even lowers energy bills. The need for remodelling may arise out of the blue and if you do not have enough funds you may be in jeopardy. However, there are several ways which you can use for remodelling Thane homes or anywhere you may live. Some of them are given below:

  1. Use the ‘cash out’ method and refinance your mortgage:

This is a very popular method of backing home improvement projects and it is called the cash out refinancing. To put it simply, this is nothing but the exchanging of an old mortgage for a new one. This process also involves conversion of the accumulated home equity into cash. This can work to your benefit especially when the interest rates are low. Along with advantages, come the disadvantages too. You should be careful when using this method. This method tends to reduce the equity that you have in your home. This will lengthen your mortgage payment time.

  1. Obtaining a home equity line of credit:

This is another way to get money to remodel or renovate your home. It is a credit agreement and is secured on the equity in your home. It works exactly like a credit card with an overall limitation on the amount that you can spend. The balance is carried forward every month. This is a smart way to get remodelling projects done as the debt is secured on your home equity and after the renovation process is complete, the equity will naturally increase.

  1. Take a second mortgage on your home:

This is also called as a ‘home equity loan’. It is exactly like any other mortgage. The only feature that separates it from the existing mortgage is the fact that the repayment term is usually shorter and the interest rate charged for this short period is usually quite high. It is, therefore advisable that when you wish to remodel, you take only as much money as would be needed for the entire remodelling process.

  1. Personal loan secured on another asset:

When you wish to take a loan for your remodelling assignment, you need not necessarily take the loan on your home equity. There are several important and valuable assets that you may own. You can also secure a loan against these assets. Lenders do not mind extending loans on equally valuable assets like cars, jewellery and the likes. The only downfall with this kind of loan is the repayment option. The term is usually shorter. This means that you need to repay within this short period.

  1. Using consumer credit for the payment of home remodelling:

This is not a very preferred choice. However, when there is no other option left for you to try, you could definitely go for this one. The main reason why people go for this option last is its high interest rates. Besides, there is absolutely no restriction on the consumer credit. This feature can lead to abuse. You can use this method only when any emergency home repair springs up. Once you use the consumer credit, ensure that you repay it as soon as possible.

These options will enable you to undertake the renovation of your home to make it look more beautiful and increase its resale value.

Author’s bio:

Larry is a builder. He works for a very well known company that has worked on many Mumbai and Thane homes. He believes that renovations and remodelling is an essential part of owning a home A father of 3, he loves to cook for the family on Sundays.