If you are looking to renovate your home, then you must know that it costs a lot of money. Whether you are to renovate your kitchen, bathroom, or even all parts of your home, you will have to spend a lot of money for these renovations. If done right, these renovations can improve both the aesthetic appeal and real estate value of your home. However, it can be difficult to renovate, especially if you were not able to save enough money. If this happens, then you have the option to get a mortgage through a bank or a licensed moneylender.
It cannot be helped, however, if the renovation loan is not enough to cover all of the expenses and costs. When this happens, then you may be left to wonder if you can borrow more money through your mortgage. Before you consider borrowing additional money, you first need to consider some details and factors. These can help you decide whether to get a remortgage or borrow additional money through your current mortgage.
If you want to know more about these details and factors, then you can read them below.
CAN I BORROW MORE MONEY ON MY MORTGAGE FOR HOME IMPROVEMENTS?
If you do not have enough money to conduct or to finish home improvements, then it can become inconvenient and troublesome. Homeowners may be left to wonder if they can avail additional money on their mortgage. If you are in the same situation, then your bank or your moneylender may be able to help you.
WHAT YOUR BANK OR MONEYLENDER MAY CONSIDER
Your bank or your moneylender will have to consider different factors before they will grant your request. They will have to consider your home’s equity, your income, current mortgage, and other factors that can affect your loan.
INCREASING YOUR RENOVATION LOAN
As stated earlier, your bank or your moneylender may base it on the equity of your home. If you want to increase your home’s equity, then you must be able to reduce your debt, to have shorter mortgage terms, and to have home improvements.
THINGS TO CONSIDER BEFORE YOU TAKE AN ADDITIONAL LOAN
Like your bank or your moneylender, you should also consider the effects and the factors of borrowing additional money on your mortgage.
Some of these will include:
- Borrowing additional money will increase your total debt.
- You have to remember that having an additional mortgage will also increase your overall debt. You need to have a clear payment plan if you do not want your debt to spiral out of control.
- Make sure that you can cope up with the additional monthly payments
- Before you are going to borrow more money, then you have to make sure that you can pay the additional monthly payments. If you are not able to pay your loan, then you might lose your home.
- Your renovation loan should only be used for home improvements.
- Compared to a personal loan, a renovation loan has a lower interest rate. However, remember that you should use your renovation loan only for home improvements. If you are going to use your renovation loan to pay for other expenses, then it might be better for you to make a personal loan or other loans that do not involve collateral.
HOW MUCH DO YOU NEED?
Before you borrow additional money, then you need to decide on how much you need. If you will borrow money that is more than what you need, then you can wind up with a debt that can become a burden to pay. For you to have an idea, you can ask your contractor for the estimate of the job.
REMORTGAGE OR GETTING AN ADDITIONAL LOAN
Deciding on whether to remortgage or to borrow additional money on your current mortgage will depend on certain factors.
These factors will include:
- Interest Rates. You can compare the interest rates of between getting a remortgage and borrowing additional money against your current mortgage. You can choose to remortgage or to borrow additional money depending on which will favor you the most.
- Current Mortgage. Before you consider remortgaging, you first need to check your remaining balance on your current mortgage. If borrowing additional money on your current mortgage will give you more money than remortgaging, then it might be better for you to not make the switch.
- Mortgage Terms & Conditions. Like the interest rates, you can compare the terms and conditions of between getting a remortgage and borrowing additional money from your current mortgage. You can choose which one is more favorable for you.
- Income. Whether you are getting a remortgage or borrowing additional money, your income will be one of the depending factors. You have to assure your bank or your moneylender that you can make the monthly payments.
If you are still unsure whether to get a remortgage or to borrow additional money, then you can consult an independent financial advisor.
ONE IMPORTANT NOTE: TURN YOUR LOAN INTO GOOD DEBT
In business, a debt can be considered good or bad. Before you consider borrowing an additional renovation loan, then you have to make sure that the loan is worthwhile. One suggested way is by concentrating on renovations that include the most important and most critical parts of your home. You can also ask your contractor if they need to do some repairs or replacements. By fully utilizing your renovation loan, you can turn that debt into good debt.