What Can I Do with a Home Renovation/Improvement Loan?
Home renovation and improvement loans can help you increase your home’s value without having to take out a personal loan with high-interest rates. You can do almost anything with a renovation loan, provided you use it to improve your home.
The most common purposes people use their renovation loans for are:
- Renovating their kitchens and bathrooms
- Adding a pool
- Increasing their home’s energy efficiency
- Home repairs
- Renovating and painting their home’s exterior
- Adding a room or other extensions
- Gardening and landscape
- Adding a garage to increase storage
What are the types of renovation loans?
In general, there are five common types of renovation loans.
- Unsecured Personal Loan: This loan is not renovation specific and can also be utilised to go on holiday or purchase a car. Typically, these loans have higher interest rates and fees because they are considered higher-risk.
- Secured Personal Loan: This loan lets you borrow money after putting up another asset as a guarantee. For renovations, you would generally put your house up as an asset or you can use the equity in your home. However, if you use the equity in your home, it must be greater than your loan amount.
- Green Loans: this personal loan has to be used for home updates that are green and sustainable. You must use them to increase your energy efficiency, but they often have lower rates and flexible repayment terms.
- Mortgage Finance: refinancing your mortgage can increase the amount you have available to spend on home improvement.
- Construction Loans: this type of loan is ideal if you are making significant changes to your home. Construction loans use drawdown payment installments, paying your contractor upon the completion of each project stage.
If you are considering applying for a home improvement loan, you should consult with the brokers at Mortgage House. We can help you compare the different types of renovation loans available and help you choose the type that best fits your financial situation. In addition, as a non-bank lender, we may be able to offer you a loan with better terms and interest rates.