Do you want to refresh your home but don’t have enough money? It seems that there is an easy solution to the problem – you can take out a bank loan for home renovation. But like any other financial service, it comes with its own benefits and drawbacks. It’s your job to research them before accepting the first offer that comes your way. Only then, you will be able to tell whether this home renovation loan is really worth it.
Consumer Credit vs. Mortgage Loan for Renovation
Consumer loans have lower maximum amounts and shorter repayment terms than mortgage loans. If you don’t have income above a certain threshold that would be sufficient to cover the monthly installments of a mortgage loan, you’d better try applying for consumer credit. Nowadays there are so many offers for online credits with flexible terms. They can help you get, if not all, at least a part of the amount you need for home renovation. Try to consider offers only from reliable institutions.
In case you choose the mortgage loan, you will face quite a few disadvantages. The unreasonably long term of the loan will lead to an increase in the total costs. The approval procedure is usually longer and the client must provide additional documents for the property. So, the consumer loan definitely seems like the better option. You can take such loans from non-bank financial institutions or banks with a proven reputation like DSK Bank.
Benefits of Consumer Loans
One of the greatest advantages of a home improvement consumer loan is the lower interest rate. When you apply for a personal loan, you will have to pay a higher interest rate because it is unsecured. On the other hand, if you get consumer credit for home renovation, you have a chance to get better terms.
Another benefit of this loan is that it requires minimal documentation. We all know how many documents are required for a mortgage loan, for example. Here you will only need an ID, property title deed, and other basic documentation. If you apply for consumer credit from a bank, you probably expect the approval process to be slow. But on the contrary – the requests are processed quickly and clients find out soon whether they are approved or have to look for another financing option.
As you can see, a bank loan for home renovation has plenty of benefits. The different lenders offer different terms, but in most cases, everything happens entirely online. All you have to do is submit an application through the site, wait to receive a response and offer, and sign the contract. Some banks also allow you to request a call or meeting with a consultant. It would be good to hear what they have to say, but you don’t have to necessarily accept the particular offer.
Are There Any Disadvantages
There is no way that a financial service does not have some drawbacks. The home renovation loan also has some disadvantages though not so fatal. Sometimes the monthly installments can be a bit higher compared to these of other consumer and fast loans. The quick approval and receipt can cause owners to make hasty decisions and eventually lead to overcapitalizing. If you plan to make bigger alterations, you might have to rent another house/apartment during the renovation which can be costly too.
What is the Best Option to Finance a Repair
Although you already know all the facts about the bank loan for home renovation, you probably still wonder: is it worth it? Well, in some cases, it could be. With the help of this loan, you can buy the necessary materials and tools and hire professionals to do the repairs for you. You can also buy new furniture or renew the old ones and the other home appliances. The home renovation loan can help you take care of the open spaces as well. You may easily cover the costs of renovating your garden or yard, glazing a terrace or balcony, or having a barbecue.
Of course, bank loans aren’t the only option to finance a repair. There is a possibility to get consumer credits from non-bank financial institutions. It depends on what amount you need and for what period of time. However, keep in mind the interest rates might be higher there despite the seemingly flexible terms. If you want to find the best option to finance your home renovation, it is always good to compare multiple offers from both banks and non-bank institutions. In general, such a project can be highly rewarding. It might not be easy because it takes time, money, patience, and a lot of planning, but it will definitely add value to your home.