Renovations are an important part of homeownership to maintain your property’s value by carrying out essential repairs and improving its curb appeal according to modern times. However, home renovations can be expensive, which is why many homeowners put them off and wait years down the road until they have enough savings to finance the project.
The good news is that it doesn’t have to be that way anymore, as you can finance your home improvement plans by applying for a renovation loan in Australia. Upon approval, you can pay for all the expenses upfront and break down the loan repayment into small, more convenient instalments.
In this post, we’ll share what a home renovation loan is, how it works, and the main benefits it offers to homeowners down under.
What is a Home Renovation Loan?
Sensing a need in the market, lenders introduced loans that homeowners can use to make essential repairs or desirable renovations on their properties. These loans were given the name “home renovation loans.” In many cases, this loan gives homeowners the funds to make those changes which they can pay back in instalments. Many people consider getting this type of loan when buying underpriced properties and taking on the costs of fixing it up for different reasons, such as creating a more personalized living space, increasing the property’s resale value, or as a way to gain equity faster compared to purchasing a move-in ready property. Whatever the reason, home renovation loans can cover large expenses, such as installing or updating heating, paint jobs, mould remediation, roofing, and updated electrical systems. It could be as simple as redoing the floors, kitchen cabinets, or bathroom tiles, etc.
Benefits of Renovation Loans
Many lenders in Australia, such as Nifty Personal Loans, offer home renovation loans and get homeowners the required financing to make the desired changes to their properties. Here are the main benefits these loans provide:
1. Limit Closing Costs
A renovation loan can combine the funds needed for the home improvement plan with the mortgage for buyers seeking properties. Doing so will limit the closing costs and consolidate your debt into a single loan.
2. Enhanced Property Value Over Time
Although loans are paid back with interest, this amount can easily be overshadowed by your property’s potential market value after the renovation. By improving your curb appeal and taking care of essential repairs, you can build equity from the start and potentially sell it for a much better price later on.
3. Limitless Customization
Buying a fixer-upper can allow homeowners to make more custom changes to the layout and design than move-in-ready properties. A renovation loan reduces or eliminates any limitations on the types of renovation you can make, such as room additions, kitchen/bathroom/basement remodels, and/or landscaping.
4. No Collateral Required
One of the biggest benefits of this loan type is that it doesn’t necessarily require collateral since many companies offer unsecured loan options, meaning you won’t have to put your home, car, or any other asset on the line for your application to be taken under consideration by a lender. Therefore, you’re in no danger of a lender foreclosing your home if you default on your payments. However, for your loan to be approved, you need to identify parts of your home that require renovation. You can hire a local restoration service to create a detailed plan to show to your lender.
5. Less Paperwork
A home renovation loan doesn’t require extensive paperwork, especially if you’re applying for a loan at the same back or from the same company. Secondly, most lenders will consider your previous loan history and documents following a physical verification of the property. Many also offer an online loan application process which saves time and enhances the shopping experience through convenience.
6. Many Lender Options
A home renovation loan is easier to secure compared to other types of unsecured loans as long as you meet the lender’s eligibility criteria and have a good credit history. Some companies even offer secured renovation loans which require applicants to put forward collateral to lower the interest amount and improve approval changes.
If you’re looking to renovate your property or purchase a fixer-upper property in Australia, the first thing you need to do is have the property assessed by a professional restoration service to get an estimate of the costs. Once you have a number, you can look online for home renovation loan providers and compare their value offerings before choosing one.