If you have a standard variable interest rate home loan, you can look into increasing the loan amount to finance improvements to your home. However, please note that your ability to increase your home loan will depend on your individual situation. You will need to contact your lender to find out where you stand with your current loan.
A home loan increase can be used for any personal purpose, including renovations, provided you have sufficient equity. With a home loan increase you can choose to keep the same repayments by extending your loan, or keep the same loan term with increased loan repayments.
A personal loan provides cash for any purpose that you don't have the time to save for in advance. You might buy a car, holiday, home renovations, or even new furniture with a personal loan and enjoy the benefits of your purchase now, whilst paying the loan back over time.
There are different types of term and interest rates available on personal loans. Fixed rate loans have the interest rate set in advance for the length of the term, so that you know exactly how much and for how long you will be paying the loan. Others offer variable rates that fluctuate with the marketplace.
Credit Card for Small Renovations
Credit cards have revolutionised the way we pay for everyday purchases, entertainment and travel. They also offer an alternative when it comes to financing small renovation projects. A credit card is a consideration where the cost of renovation is small, or when there is difficulty obtaining alternative finance, as the criteria for a limit increase or issue of a credit card differs from that for other finance.
However, do be aware that a credit rating check may well be carried out, and the interest rate will invariably be significantly higher than offered on Home Equity or Personal Loans.
The questions you should ask
- Does the loan I'm looking at give me the features I need to repay my loan faster?
- Does the rate I'm looking at reflect the real cost of the loan?
- Are there application and management fees and what are they?
- What will it cost me to change out of the loan I'm looking at?
- Do I want the security of a fixed rate or the flexibility of a variable rate?