When you’re planning a large-scale home renovation, the biggest problem you need to overcome is funding it. It’s going to cost you a lot of money but if you’re lucky, you’ll be able to afford to pay for it outright by saving up the cash. Unfortunately, most people aren’t in that position. The average price of a home extension is around $40,000 which is an amount that most people don’t have lying around. That means you’ll have to find some other way of funding your new home addition. These are your options.
Borrow Against Your Life Insurance
Not many people realize that you can borrow money against your life insurance policy if you have one. It’s a great way to raise the extra cash that you need to build your home extension. Wholelifeinsurance.co has lots of great information on borrowing money against your life insurance. You can only borrow against a permanent life insurance policy so if you’ve got a term policy then you won’t be able to raise the cash this way. When you’re borrowing against your life insurance policy, you are essentially borrowing money from yourself. The major benefit to this is that you don’t need to go through any credit checks and it won’t have any effect on your credit score whatsoever.
The most efficient way to raise the money that you need is to re-mortgage your home. The amount that you are eligible to borrow depends on a few things. The amount that you still owe on the mortgage is a big one. If you haven’t paid off that much of your existing mortgage, you won’t be able to get much so it might be best to go another direction. Your credit rating also factors in so anybody with a lower credit rating is better off borrowing against your life insurance. However, re-mortgaging does have a major benefit. The value that your new addition adds to the home increases the amount of money that you’re able to borrow so if you’re making a very ambitious alteration to your house, you’re most likely to get the money that you need by re-mortgaging your home. Visit bankofamerica.com for information on interest rates on remortgaging.
Home Improvement Loans
A home improvement loan is essentially the same as a second mortgage, but it is unrelated to the remaining balance on the mortgage so you might be able to get more. You’ll still have to go through all of the same credit checks before you get the loan. An unsecured loan is best for smaller projects like a new bathroom that won’t cost a huge amount but if you are adding a large extension, you’ll have to go for a secured loan.
When you’ve exhausted all of the previous options, you could consider cancelling your plans but if you’ve got your heart set on it, there is still a way to get the money. Credit cards are the most expensive way to do it and the rate of interest that you’ll pay is going to be high. If you’re using a credit card to fund a home improvement, it’s only sensible to use it for smaller renovations rather than full-scale extensions.
Funding a large home renovation is going to be expensive however you choose to borrow the money. If you’re going to put yourself in a large amount of debt, you might want to hold off for a few years and save up some money.