Houses that need a lot of hard work and love in order to truly shine are sometimes referred to as a ‘renovator’s dream’. However, this dream can sometimes turn into a nightmare if you aren’t careful. We’ve outlined a few ways of financing a fixer-upper so that it’s a little easier to make what you envision a reality.
Pay for It Yourself
The simplest way to finance your renovations is to fork out your own money to cover the costs. It isn’t always the easiest method if you don’t have the savings or assets, but it is the one with the least amount of risk and hassle. Just ensure that you have money left over after the renovations to handle any emergency or unexpected costs.
Apply for a Renovation Loan
A renovation loan, also known as a construction loan, allows you to borrow the full cost of the renovations but in stages rather than all at once. Through an inspection, a lender will typically assess the cost of each stage of construction. As each stage is completed, the lender will pay the full amount for that stage. A renovation loan is a good option to protect both yourself and the lender from risk as the money is held back until each stage is complete.
Refinance Your Existing Home Loan
If you have the equity, and your home loan has offset facilitation, then refinancing your home loan for a renovation is a good option to explore. You’ll be able to increase the size of your loan and place the money you need for the renovation into an offset account. This ensures you don’t have to pay interest on the extra amount until it is used for renovations.
Each of these options would be a good way to finance your fixer-upper and any renovations you plan to make.
If you would like to learn more about how to finance your renovation, contact us today.