Most people associate the words “home repair” with high costs. After all, you need to purchase building materials, pay to craftsmen for their work, and then with high probability you will also have to change the furniture.
Of course, you can stretch this “pleasure” in time and do all the work yourself and only at the expense of your own income, but then there is a high probability that the repair will never end. Therefore, one of the real options to do everything at once, so that you don’t have to redo anything later or put it off, is to get a home improvement loan.
How does an improvement loan work?
Loans for an apartment or house repair are considered to be personal loans. Depending on the required amount of financing, they can be either unsecured or secured.
In most cases, such loans do not include verification of the intended use of funds. That is, the borrower, having received the money, can spend it at his/her discretion. However, some financial institutions demand from borrowers to document expenses – receipts, settlement checks, contracts, invoices, etc. for the purchase of building materials, payment for work. Thus, banks control their customers so that they do not waste money: on entertainment and unnecessary things, but specifically used to improve their living conditions.
Home improvement is an expensive business and a small amount is not enough for its implementation, therefore, to increase the amount of financing, you can additionally provide a bank or microfinance organization with a guarantee or real estate as a security. In addition, in this way you can reduce the interest rate by several points.
It is worth paying attention that if you plan to improve your apartment, which is in the mortgage, you first need to take a written permit from the bank, and only then proceed with the repair. Otherwise, later, during the verification of the pledge, employees of a financial institution may fine the borrower for violations of the pledge storage conditions, which led to a decrease in its market value.
You can take a home improvement loan both for a year and for a longer period. It all depends on the loan conditions. For example, if a borrower needs a small amount, then taking a loan for a long period does not make sense, but when a potential client plans to make capital changes in his/her home, then he/she needs a lot of money. In this case, the repayment period may be ten years.
By the way, in order to receive a large amount, the client will need to transfer real estate as a pledge to the bank. Two factors affect the size of a loan for home renovation:
- monthly income level of a potential debtor – repayment expenses should not exceed 80% of his/her income;
- market value of property pledged – the maximum loan amount is limited to 50-80% of the mortgage value.
How can I apply for a home improvement loan?
You can get a home improvement loan both in a bank and in a microfinance organization. The former can provide money, both in cash and in non-cash form, both on pledge and on a guarantee.
Potential clients can apply to microfinance organizations when they are short of a small amount of money or banks are already refusing to provide new loans due to their debt overburden or negative credit history.
The advantage of lending at banks is lower interest rates and the ability to borrow money for a long time. Microfinance organizations benefit from the speed of granting and there is no need to bring a huge number of documents to assess the financial condition.
By the way, you can get a loan remotely using the Internet. To do this, you need to fill out a special form on the website of a financial institution, send them a copy of your passport, and then confirm your agreement with the terms of the loan. After that, the money will go to the payment card or account specified in the application.
How much do home improvements cost?
On average, doing a complete house improvement costs approximately $35,000-65,000.
• average cost of a kitchen improvement – $19,000;
• average cost of a bathroom improvement – $8,000;
• painting of a room – $360 for a 120 sq. ft. room;
• carpet installation – $3.50 / sq.ft2;
• plumbing – $300;
• electric work – $360.
What should I avoid when looking for home improvement financing?
Before applying for a loan, compare the offers of several financial institutions.
When applying for a home improvement loan, make sure of the following:
• How much money will it take to renovate the apartment?
• Where can I get a favorable loan for repairs?
• How will monthly payments affect the family budget?
• How long will it take you to fully repay the loan?
These are key questions that should guide you in the right direction. You must find the best loan option. But even in this case, you must make sure that it does not hit hard on the family budget, whether you can allocate money for monthly payments.
The client should always remember that every time he/she applies for a loan, receives approval or rejection, this affects the credit history. In order not to damage your credit history, study the conditions of the lender before submitting an application to find out if the basic requirements correspond to you.
Self-sufficiency and confidence are good, but not when it comes to borrowing money. Everything may happen in the future: you may lose your job or become unable to pay for your lifestyle. Adding the need to repay the loan can drain you financially and psychologically, so you always need to take the exact amount needed for a specific purpose. Try to repay the loan as soon as you can.
What are the advantages of a home improvement loan?
- A loan allows you to make repairs completely and faster than if you saved money on it.
- With additional financing, you will be able to implement your plans more efficiently, for example, using the services of a designer or the help of builders.
- Work performed can increase the value of real estate and its attractiveness for future buyers.
- Some updates contribute to the comfort and energy efficiency of the house: for example, insulation of the external wall or updating the heating system.
- The conditions of a loan are quite flexible, so you can use it to carry out small repair work, as well as for a larger renovation.
Also, our website provides detailed information about swimming pool financing and jet ski loans. Webmoneyloans is always ready to help you.
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