How to Finance Home Improvement Projects during COVID-19?

COVID-19 has reshaped our personal as well as professional lives in a way that none of us had ever imagined. Working from home has become the “new normal” as almost half of Britain has adopted this new culture. We have started spending more time in our homes and that has made us think about the changes that can be done to improve our homes. Financing home improvement projects during COVID-19 can be challenging. Let us find more about it.

With the rising number of cases, most of the employers are unwilling to reopen their workplaces considering the risk involved. That means most of the workforce will continue working from home. According to figures from the Office for National Statistics, 49% of workers have reported to work from home. Most of us are spending a significant amount of time in our homes, and this has paved the way for improving our homes. From setting up an office space in our home to expanding our homes to cater to our needs – home improvement has become a trend among the homeowners.

Taking up a home improvement project requires precise planning and financial measures to support the plan of action. Banks and lending companies have also changed the way they worked. So, how would you manage to finance your home improvement project during COVID-19?

5 Questions to ask before considering a home improvement project

Home improvements are a great investment, but it is a huge responsibility that you have to undertake after carefully examining your circumstances. Also, it is important to understand which home improvements will result in maximum benefit as not all the improvements will yield in the same result.

Here are 5 questions that you should ask yourself while considering a home improvement project:

1. Which home improvements are beneficial?

There are a few improvements which have gained huge popularity as they help in raising the overall value of the property. For example, consider adding an extension to your current property, upgrading the security systems, and building a wall to separate spaces are some of the popular improvements taken up by Brits recently.

Eco-friendly home improvements are another major improvement that UK homeowners are considering. 31% of the homeowners are planning to make their homes’ energy efficient by upgrading to eco-friendly appliances, smart lighting, double glazing, solar water heating, and cavity wall insulation.

Prepare a list of all the home improvements that you are considering to take up. Evaluate their usage and how they will benefit you, in the long run, to filter out the unnecessary improvements that your home doesn’t need at the moment.

2. How much money do you need to spend on the projects that you have finalized?

After listing all the home improvements that you are ready to get done – you need to plan for the finance. Minor home improvements such as changing the wallpapers, redoing the colour of the walls, decorate the bathroom or kitchen area may not require heavy financing. And if you are considering to add a roof garden, swimming pool, underfloor heating, landscape the garden – the cost can soar high.

If you know how much you have to spend on the upgrades, it will become easier for you to plan for your finances.

3. How to finance home improvement projects?

Financing is an important part of any home improvement project. Some homeowners plan for an upscaling in advance and they save money for it accordingly. However, not all of us have thousands of pound lying around to finance the project. In such cases, you can use your credit card, a home improvement loan, HELOC, and other financing options that are available to you.

If you have some savings but you need more to cover the expenses that you are required to carry out – you can use the savings and look for ways to pay for the rest of the amount. We will discuss the various ways of financing in the next section.

4. Do you need a contractor for the project or you can do it on your own?

There are a lot of home improvements that fall in the “DIY” category. However, other upgrades require an expert or a professional. Depending on the type of home improvements you are considering – you will have to decide whether you need someone or you can do it alone. For example, if you are planning to repaint the walls of your bathroom and decorate it, you may do it on your own. You do not need an expert as you will get a lot of ideas on the internet. But if you are about to install a double glazing or underfloor heating – you will need a professional.

5. Shall I improve my current home or move to a new property?

House prices were expected to fall post lockdown making home buying an affordable experience for a lot of first-time buyers. Recently, prices have seen a surge due to a mini-boom in the housing market. High buyer demand has resulted in the hike and that may impact your home buying journey.

Rather than moving to a new property, you can work on upgrading your current home. Renovating your current home will be much cheaper than moving to a new property.

5 Financing options that you may use for home improvement

Before you start, consider all the available options to find the one that will suit your requirements and financial circumstances. Take a look at these 5 financing options and choose the best one.

1. Use your savings

Making home improvements using your savings is an excellent way to fund the project. You do not have to pay any interest on the money that you are using. Later on, you can start building your savings from the scratch. Renovating a home is an investment that you are making, so using your savings will be considered as a wise decision.

If you have kept the money in a fixed rate bond, you may have to pay an additional amount as a penalty for an early withdrawal. Therefore, talk to your bank before withdrawing the money and understand the charges that you have to pay.

2. 0% Interest credit cards

You can also use 0% interest credit cards for funding home improvements. These cards offer interest-free period for a certain timeframe. After the offer expires, regular charges are applied on the credit card. So, if you can afford to repay the credit card debt within the interest-free period, you do not have to pay any additional charges as interest.

Learn more about how 0% APR works.

3. Personal loans for home improvement

Borrowing a personal loan for home improvement may also ease your financial burden. You can borrow a personal loan and spread the cost of repayment over several months according to your monthly budget and income.

The best thing about borrowing a personal loan is you do not have to provide any collateral while borrowing a loan. Also, the application process is completely hassle-free. All you need to have is a good credit score so that you can get a loan at a low-interest rate.

4. Home equity line of credit (HELOC)

Generally termed as a home equity loan, it will require you to use a portion of your equity on your home. It is also known as a second mortgage and is a secured form of a loan. Your house will be used as collateral. HELOC is a revolving credit line. That means you will only have to pay interest on the amount that you use and no interest will be levied on the unused amount of the credit line.

Learn more about home equity loan.

5. Secured loan

A secured loan is a loan that you can borrow by offering collateral to the lender. The asset that you have used as collateral will be at risk if you do not repay the loan on time. However, the interest rate that you have to pay on the loan will be low as the lender can recover the money they owe to you if you default.

Understand the difference between an unsecured loan and a secured loan.

Green Home Grant Scheme – How as a homeowner you can gain benefit from this?

To stir the economy, the government has introduced the Green Home Grant Scheme that is aimed to benefits landlords and homeowners in the UK. The scheme will provide vouchers up to £10,000 (Maximum) to the homeowners for installing energy-efficient improvements.

The voucher will cover two-thirds of the cost of “eligible” home improvements. The basic eligibility criteria that you need to fulfil are:

• You must own your home, even if you are on shared ownership.
• You must own your park on a residential site.
• You must be a residential landlord – in the private or social rented sector.

To gain the benefits, you need to get quotes from verified and trusted installers who are registered by TrustMark. Check the list of installers on Simple Energy Advice website to find the installer near your area. Get in touch with your local contractor and discuss your home improvement plan.

Recently, some flaws in the design of the scheme have surfaced and the government is proactively working towards to fix it. Approximately, 1000 companies have signed up for the Green Home Grant scheme as of now. And the government is trying to bring in more companies on the board to meet the demand.

Read more about Green Home Grant Scheme.

Should you consider improving your home during COVID-19?

• The government is trying to plan recovery efforts that will get-up-and-go companies out of the coronavirus-induced recession. Measures are taken by keeping into account a few factors such as climate change, a sluggish economy, and the UK’s housing market.
• Most of the homeowners are focusing on energy-efficient home improvements and the trend is expected to witness a boom. If you are planning to accommodate such features in your home, the value of your property may arise in the future or post-COVID scene.
• You should take your finances while planning a home improvement project, especially during COVID-19. If you are prepared financially to manage the expenses of the project and have a strong financial safety net to fall back on in case of redundancy – then you may invest in a home improvement project.

How LoanTube can help you find the right personal loan?

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