| Depending upon the extent of home renovation | | | | equity. Apart from the availability of the |
| that you wish to carry out in order to | | | | required amount of finance, you would stand |
| upgrade your home, you would need varying | | | | to gain considerably if the current interest |
| amounts of finance. On the whole, it is quite | | | | rates are less than what they were when you |
| expensive to carry out any type of | | | | had originally taken the mortgage. |
| renovation, especially because it is a labor | | | | |
| intensive work. Before you think of | | | | 4) Home equity: If you have enough equity you |
| renovating your home, you should make an | | | | can opt for a home equity line of credit for |
| estimate of how much it would cost you and | | | | your home renovation. Since this a secured |
| how you can arrange for financing the home | | | | loan, the interest rate will be low and the |
| renovation project. | | | | interest will be tax deductible. You can also |
| | | | take home equity loans which are |
| Common Financing Options | | | | characterized by fixed interest rates and |
| | | | monthly payments and preset amounts of loan |
| 1) Personal Savings: If you are averse to | | | | that can be taken only once. |
| taking any kind of loan, you can start saving | | | | |
| money and in a few years time you might be | | | | 5) Homeowner loans: These loans are available |
| able to save enough to pay for the home | | | | easily and they are sanctioned on the basis |
| renovation work. While this might appear to | | | | of your income, irrespective of the equity |
| be a judicious decision, your project of home | | | | that you have. These are secured loans and as |
| renovation could get delayed by many years | | | | such they are tax deductible. |
| too. Moreover, this delay might push up the | | | | |
| cost due to inflation and you would be | | | | 6) Value-added loans: The increased value of |
| deprived of staying in your dream home for | | | | your home after the home renovation is done |
| several years. In case you already have the | | | | is the criterion for this type of loan which |
| funds, you should consider the returns that | | | | is granted up to a maximum of 80% of the new |
| you can get on your money and the need to | | | | value of your home after the renovation. The |
| keep it for emergency situations in your | | | | interest rates are very competitive and the |
| life. | | | | payments are released progressively based on |
| | | | the amount of work that has been completed. |
| 2) Credit cards: This is a very convenient | | | | |
| way of arranging for finance but the | | | | Although secured loans offer easy loan terms |
| disadvantage is that it carries a very high | | | | and interest rates and are tax deductible, |
| rate of interest. | | | | you must make sure that you make the |
| | | | repayments on time as per the agreed schedule |
| 3) Refinancing: You can refinance the | | | | because failure to do so might mean losing |
| mortgage of your home to get finance for the | | | | your home. |
| home renovation work if you have sufficient | | | | |