Tuesday, November 22, 2016

Want to Renovate Your Home Before Christmas? Go for Short Term Personal Loan

festive loans
Renovating a home is as complex as purchasing one. It is an expensive affair and therefore, it is important for individuals to set a budget and stay within the same to avoid financial difficulties. Furthermore, seeking estimates from multiple contractors before making the choice is also advisable. This will help them to understand the market rates and will ensure they do not end up paying higher costs. Most importantly, funding the renovation project becomes crucial because it has long-term repercussions if an uninformed choice is made. Homeowners who want to undertake such projects may save the money required for the renovation. Although this is the cheapest option, it is a long and cumbersome alternative. Another option is to borrow against the home’s equity through a line of credit. However, the home equity balance may be insufficient to fund the renovation. Furthermore, if the borrowers fail to repay this money, they may lose their homes. Therefore, the most feasible option is to fund the renovation project through a personal loan. This may be a convenient way to renovate the home before the festive season.

About Personal Loans

Personal loans are generally unsecured and borrowers do not have to mortgage their homes to avail of these funds. The personal loan interest rates are often higher when compared to other types of loans. Furthermore, these rates depend on the overall credit score of the borrowers. However, the interest rate is fixed for the entire duration of the loan, which enables homeowners to keep a track of their monthly expenses. Another benefit of choosing a personal loan to fund home renovation projects is the shorter duration ranging between one year and five years. The five-year repayment period enables borrowers to repay the loan without facing any financial difficulties. Compared to home equity or home improvement loans, personal loans are sanctioned faster. This is because lenders do not require a large number of documents at the time of application. The entire procedure is completed within a few days, which allows homeowners to commence the renovation faster.

Comparing Personal Loans with Other Funding Options

Homeowners must choose the best option depending on their financial situation. If they have a good credit history and the renovation is not going to be expensive, considering 0% credit cards is recommended. However, individuals are advised to ensure they are able to repay the entire amount before the end of the interest-free period. If they are unable to do so, they may end up paying higher interest on their outstanding balance. Home improvement loans are another popular option to fund renovations. Although these are cheaper than personal loans, most lenders do not provide these loans for all types of renovations. Furthermore, banks offer between 75% and 90% of the project costs. The balance expenses have to be incurred by the homeowners. If an individual does not have this margin money, opting for a personal loan may be a feasible choice. Increasing the amount on the existing home loan is also an option. However, this would entirely depend on the market value of the home (as determined by the lender). Compared to all these options, a personal loan is less cumbersome and requires less paperwork. Moreover, it is unsecured, which means there is no risk of losing the home if the borrower fails to repay the money on time. However, any delay in the repayment of the loan is reflected in the credit scores of the borrower. Having a good credit history is important because it would affect his capability to borrow in the future.

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