Ways to Pay for Home Improvement for Better Home Equity
One of the best ways to increase home equity is to go for home improvement projects that bring additional value to a home. Unfortunately, home improvement costs can add up quite fast, leaving those with no extra cash having to take loans. Luckily, homeowners have the option to tap existing home equity by means of a mortgage refinance, home equity loan, or a home equity line of credit to pay for home improvement. If you’re planning to use your existing home equity to improve the value of your home, then you’ll like this article we’ve prepared for you!
Why Use a Home Equity Loan
If your home improvement projects will cost a lot of cash upfront, then a home equity loan might be for you. It allows homeowners to take out a lump sum that they can pay later. This loan has a lower interest rate than traditional loans and gives more flexibility with the types and extent of home improvement projects the homeowner can start with.
Why Consider a Home Equity Line of Credit
If your home improvement project will take some time and is more of a series of expenses rather than one big project, then a HELOC might be for you. A HELOC allows the homeowner access to funds within the set draw period, giving the homeowner plenty of time to get projects done while saving on interest rates. This is because interest is only charged to the borrowed amount at any given time, not the ceiling value of the loan. A Home Equity Line of Credit typically has a long draw period, giving borrowers a long time to prepare and plenty of time to break even before payment is due.
Should You Go for a Mortgage Refinance?
A mortgage refinance will allow you to re-do an old mortgage for more favourable current market rates and give you extra cash to fund improvement projects. This also means lower monthly payments and interest rates, thereby saving you money which you can also use for home improvement. You can opt for cash-out refinance which will allow you to access as much as 80% of your home equity. This will mean using your home equity as collateral. Better make sure to consult mortgage experts before choosing a cash-out refinance.
How About a Personal Loan?
A personal loan can be good for those who can pay back as soon as possible, have impressive credit score, and don’t mind a higher interest rate than the previous options. The trade-off is having better control.
Increasing home equity is possible without plenty of savings if you’re open to options that can make your existing home equity work for you. By accessing your home equity or using it as a leverage to get a hold of some cash, you’ll be more free planning and implementing home improvement projects that can place you in better financial standing in the future with the help of boosting your home’s value. We’re here to help you at Mortgage Central Canada. Contact us today!