A Guide To Home Improvement Loans
When it comes to improving the appearance of your home, many homeowners are eager to do so. However, even the smallest of renovations still require a substantial amount of money. So in cases such as these people need options. Home improvement loans are basically designed for homeowners who are renovating their homes.
However, this type of loan is not the only type of loan that can be used to make renovations to your home. Ultimately there are so many different types of loans out there such as personal loans. You should bare in mind that each type of loan has its own benefits and disadvantages. So you need to weigh out the pros and cons of each type of loan to decide what is the best option for you.
Who takes out home improvement loans?
Research suggests that the people who take out home improvement loans usually have the highest average income among all loan takers. So this is an indication that home improvement loans attract a more affluent type of borrower. When it comes to the age group, people between the ages of 25 and 40 take out these loans the most. The reason for this is that first-time homebuyers are usually between this age bracket.
The advantages of a home improvement loan
A personal loan for home improvement is usually a great option. This is mainly because you can take out an amount of perhaps 15,000 pounds and you can choose to pay back it over the period of one, three or five years. Your instalments are fixed so you can plan and budget better. Ultimately, you can also choose to pay it off sooner if you have the means.
Then again, in the event that you need to reduce it you can also spread it out. Another bonus is that some companies even offer a payment holiday where you get grace for the first one to three months, meaning that you don’t have to pay your instalments during that time frame.
Disadvantages of this type of loan
One of the disadvantages of these loans is the fact that the most reasonable interest rates are offered to those borrowers willing to pay over a period of 3 to 5 years. So if you want to pay your loan off sooner than that, you may be subjected to higher interest rates. Ultimately though it all depends on your credit score. So before going onto every single personal loan website and doing an application, consider how it is going to affect your credit score.
Every time you create an application for a loan, it effects on your credit score. So too many applications over a short space of time may not seem very attractive to many lenders. Rejections are also noted on your credit score, so before applying at any financial institution, get your credit score and make sure that it is high enough to qualify for that specific loan.
There are many other alternatives available to you when it comes to borrowing money. This includes secured loans, unsecured loans, bridging loans, guarantor loans, short term loans and credit cards as well. If your credit score is not one of the best, then you can also opt for bad credit loans, but you should note that you will not qualify for a large amount.
Car loans are also available for you if you’re planning on buying your first vehicle. If you already have a lot of debt, instead of going for a home improvement loan, consider looking into debt consolidation loans.
Doorstep loans and short term loans also a good option for people with bad credit history. However, if you’re considering making minor changes to your home such as simply investing in new interior decor or accessories, then you can also opt for payday loans. Ultimately, irrespective of which financial option you choose, you need to make sure that you can comfortably afford repaying it. Failure to pay back any loan from any financial institution will damage your credit score and it will take a long time to bring it up to speed again. So these are all of the factors that you need to take into consideration before making a loan application. Always ensure that you borrow responsibly.