Home renovations can be a daunting proposition, but accessing money for improvements around your property is usually a far less stressful task.
Vince Clark, head of home lending and deposits at ASB, says there are a variety of different ways homeowners can obtain funds for their renovation plans, with personal loans and home loan top-ups just some of the options available.
Because higher interest rates usually apply to unsecured forms of borrowing such as personal loans, Clark says it makes the most financial sense to use your existing home loan to access the money you need.
“A home loan is likely to be the most affordable borrowing a customer will ever have. With home loans, interest rates currently range from around 6% p.a. to 7.5% p.a, whilst unsecured lending can start from 17.95% p.a. or more. That’s a huge difference.”
Clark advises would-be renovators to do their homework by adopting a “common sense approach” to getting the renovation they want at the cost they expect, so there are no last-minute surprises.
Getting a variety of quotes and using reputable tradespeople is the first step to avoid a renovation nightmare. This will also provide an accurate gauge to determine how much money you will need to borrow, which is an important part of your conversation with the bank.
Obtaining finance for your renovations should be the easy part, Clark says. Look for a lender that makes this process as painless as possible. Ensuring you get the renovation you want with no surprises from builders and other tradespeople should be the main focus.
- Do your homework when considering major renovations – the finance part should be the easy bit.
- Talk to your bank about what options are available to you. Can you get a top up on your home loan?
- Remember your home loan is likely to be the cheapest form of borrowing you have.