Whether you have suddenly been hit with an unexpected and costly home repair bill, or you want to carry out some vital maintenance or renovations on your property, it can be difficult to know how to finance your project. In an ideal world, you would have a healthy sum of money squirreled away in a high-interest savings fund, just waiting to be spent on repairing and renovating your home. But sadly, not many people will have access to this sort of luxury.
Did you know that the average homeowner should be budgeting 1% of their home’s worth for home maintenance each and every year? To put that into perspective, if your home is worth $400,000, then you need to be saving $4,000 a year to cover the costs of caring for your home. That is $333.33 per month!
Unfortunately, many people cannot afford to save this amount of money on a regular basis, so how are you supposed to pay for home repairs and renovations? Keep reading to find out.
Set a strict budget
Home repairs are a bit like cosmetic surgery; once you have had something fixed or improved, you suddenly start to notice other areas that could be upgraded. It’s a slippery slope, and if you are already worried about how you are going to pay for your repairs or renovations, then the last thing you need to worry about is additional costs.
By setting a strict, yet realistic budget, you can make sure that you know exactly how much money you need to find, plus you can work out how you are going to repay the money.
Find the right laborers
You don’t want to be paying over the odds for poor quality work; therefore, it is a good idea to carry out extensive research online before choosing the laborers you are going to hire. Make sure that you read as many online reviews as possible, and don’t be afraid to ask for several references that have been given within the last 2 years.
You should also ensure that you get quotes for any jobs that you need doing, rather than estimates, as these can often spiral and leave you struggling to pay.
Choose the best way to fund your home improvements
This is arguably the most crucial step; you need to make sure that you choose the right type of finance for you and your family’s circumstances. If you have any savings, then this should be your first port of call, as the interest you are earning on these savings will most likely be lower than the amount you will pay back on a loan or credit card.
Your next option is to take out a home improvement loan. These are a good idea as long as you make sure that you are comfortably able to afford the monthly repayments. You may want to factor these repayment costs into your original budget to ensure that they are manageable for you. The best rates are typically offered for personal loans between $5,000 to $35,000, and thanks to an abundance of lenders, you should be able to secure a loan with a low and affordable interest rate.
Unlike a mortgage, home improvement loans are usually unsecured, meaning that your home will not be at risk if you fail to make the repayments. That being said, it will affect your credit score, and you could accrue costly interest if you miss payments.