Should You Take a Personal Loan to Renovate Your Home?
If you have a house, chances are, there are some minor fixes that you’d like to make. It could mean adding a new room for your little one or giving your bedroom a well-deserved makeover. Financing this out of pocket isn’t always possible.
That’s where a personal loan comes in handy.
Since these loans offer quick approval, and come with fixed terms, they are a top choice among several homeowners. But are personal loans really useful for home renovations? Do they have any drawbacks? Here’s what you have to know!
Why are Personal Loans a Good Option for Home Renovations?
Now, there are quite a few benefits of picking this type of loan for your home renovations. An unsecured personal loan can be your go-to choice. This is because you don’t have to submit any asset as collateral for your lender. Sure, the interest will be higher, but the fixed you don’t have to worry about losing your asset in case of a missed payment.
Besides this, there are some other benefits of using this type of loan for your home renovations.
No Limitations or Restrictions
You can use the funding from your personal loan for anything. This means, you can choose to repair a leaky roof or even add a fancy media room to your home. As personal loans allow you to use the funds without any oversight, no bank official will double-check your expenditure.
Personal loans are pretty popular for their hassle-free application. In most cases, your loan will be approved within 1-3 days, and your funds will be subsequently disbursed. Since the eligibility criteria is easy to meet and the process too is equally quick, personal loans continue to be a top choice among homeowners.
Helps You Handle Unplanned Expenses
Even the most detailed schedule can’t give you the exact expenditure of your home repair. Things get all the more difficult because your contractors and labourers only give you an approximate estimate of the costs that you’re likely to incur. There might be added costs as your renovation project gets through. For instance, while working on one room, your contractor might suggest you to fix an internal leakage that you had no idea about. You may also be advised to add a new coat of paint or waterproof a nearby room.
These sudden, unplanned costs can be easily can handled with a personal loan. Since these loans are available with minimum hassle, you can always apply for them when you’re out of cash.
Improves the Value of Your Property
When you work on home upgrades, you inadvertently enhance the value of your property. So if you’re strategic in applying for the loan, your property will increase in value, and the loaned amount will be worth every penny.
A personal loan is also useful as it’ll help you to address the repairs that immediately need your attention. Taking the time to save up might exacerbate the situation, and the impending costs might be higher. So if you’re looking to improve the value of your home, personal loans might be the simplest option.
What Should You Consider Before Applying For The Loan?
Revamping your existing home can be a gruelling task. Perhaps this is why most individuals opt for a personal loan to deal with the expenses. Since remodelling or furnishing might incur unexpected expenses along the way, this financing option seems to work best for many individuals. That being said, it is also important to consider a couple of other factors before applying for personal financing.
Requirements – Before you apply for the loan, it is really important to figure out an estimate amount. Make a list of the things that require repairs or a renovation. This should also include the purchases that you’re likely to incur along the way. Once you have this list, it’ll be easier for you to set a specific budget.
Interest rate – Your credit score isn’t just the only factor that determines whether you qualify for a personal loan. In addition to this score, the amount you’re planning to borrow and the tenure of the loan might also affect the interest rate. You can choose from a fixed/floating interest rate, according to your current financial situation.
Added Fees – Do note that you will be charged some added fees along with basic interest rate. If you browse through different personal loan options, you find that repayment plans differ on the basis of terms and fees. High fees might also increase the amount for repayment.
Repayment Plan – Before opting for a personal loan, it is really important to understand your financial situation. if you can’t afford a personal loan, it’s best to keep your home renovations on hold. Use your savings to take care of urgent home repairs. Taking up a loan you can’t repay might lead to financial struggles in the long run.
Like any other financial product, you should look around for a personal loan that works best for your upcoming home renovation expenses. You can browse through great deals at online comparison websites, for a good idea about the loans you’re currently eligible for. Don’t settle for the first option. Do your research and seal the deal on one that meets all your requirements.