Home Improvement is the process of renovating or
making additions to your home space. With the increase in lifestyle
improvement, renovating and refurbishing homes have become a common
practise. However, your regular monthly budget may not be sufficient
to give you the luxury of carrying out the changes that you have
planned for your home. Home improvement loans are there to bail you
out of this financial crisis. Home improvement loans can be used to:
" Personalize the living area
" Remodeling of kitchen or bedroom " Addition of a
new room " Building a conservatory " Repairing or
changing electrical or plumbing system " Roof or window
Shopping for the right home improvement loan can
be quite a task, if you are not sure what you are looking for. The
terms and conditions coupled with repayment options gives the
borrower a lot of options.
A certain organizations and financial
institutions that lend money to purchase a property, re-extends it
services by providing loans for making the repairs and improvements
around homes. However, it is often a Catch -22 situation, because
most banks do not lend the money before the renovations are done or
are half way through, and the repairs cannot be done until the home
improvement loan money is in hand.
Most financial institutes, being aware of this
have designed various programs to address this problem. The seekers
of the home improvement loan should present the institution with a
detailed proposal showing the scope of work to be done, including a
detailed cost estimate on each repair or improvement of the house.
The financial institution than performs an appraisal in order to
determine the value of the property after renovation.
If the borrower passes the credit-worthiness
test, the home improvement loan is inclusive of a contingency
reserve of 10% to 20% of the remodeling costs and is used to cover
any extra work which is not included in the original proposal.
However, before applying for a loan you should ask your self the
following fundamental questions and then evaluate the different
" You need to know if the improvements that
you plan to undertake are increasing the value of your home to more
than the loan you apply for. " How much will the monthly
payments be " What are the tax implications and the
possible tax deductions
Usually, home improvement loans are granted
against the first mortgage by the current lender. As a borrower, one
should get detailed quotes and should make a comparison with
different options available, since most loans are extended for the
remaining period of the original mortgage. In other cases the
borrower may receive the money or the loan only upon proving the
payments to the contractor.
A borrower can also opt for Home mortgage
refinancing rather than home improvement loan. By refinancing your
mortgage you may be able to lower your payments, defer payments or
release some cash for home improvements.
If these options do not suit you, you can opt
for an unsecured loan. A personal loan for home improvement doesn't
require you to have equity in your home or borrow against the value
of your home. It is a loan disbursed by either a finance company or
bank to finance your home improvement