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