If times weren’t hard enough, we now face the biggest recession on record, which will make the costs of moving house a greater factor in whether we stay and change what we have, or whether the changes are too great and a new property is the only way forward. The biggest problem with any house renovation project is the budget.
There is no upper limit on what you could spend but obviously we would urge you to try and not spend more than the resulting property is worth, but do remember to include in your budget a contingency fee of approximately 20% as you will find things along the way that you hadn’t planned for.
Here are some possible tips on how to finance a home renovation project once you have costed your budget...
1. Mortgage Seek out an independent mortgage advisor to search the best interest rate deals and take into account when your current mortgage is tied into. Can then work out the best rate deals for you to determine affordability.
2. Personal Loans/ Credit Cards, Be careful when taking out any loans or credit cards. You need to be very organised to keep up to date with repayments and ideally you will want to look at 0% APR deals but these tend to be for a short period and will need switching frequently. Make sure that you look at whether your current credit score can be improved and workout security on how you intend to make repayments. Your home can be at risk if you don't make repayments so please do get independent financial advice if you’re not sure.
3. Family Borrowing Approaching your family for a loan or part loan can cause tensions, but family members can buy a part share of your property as a future investment. If buying part of a property then legal advice will be needed.
4. Releasing money from Pension of equity of home. Releasing money from a pension or from the equity of your existing home is a possibility, but sometimes this can have long term effects. If you are choosing this route, then we would urge you to seek the advice of an independent financial advisor that can go through the long-term aspects of releasing money in the short term. Be realistic with your budget, and potential overspends. Building materials can rise rapidly so what you may have costed three months ago may not be the same as you need now. Also, as you go through your project, make sure you write up every cost along the way no matter how small, as often the small things add up to a significant part of the budget.
The link below provides an idea of costs for an extension and how to set out a budget but if you need further advice then please let us know.