When your home needs more than just a splash of paint to turn it into a property you adore and get it fit for purpose, it is likely that you will require a fair amount of cash in order to see the project through from start to finish. It may simply be that you need an extra bedroom or living space and are considering a loft conversion or extension project for which you require additional finance for. Or, you may have a larger project in mind and have bought a property that it not yet habitable with the ambition of converting it into your dream home, for which you might require a considerable cash injection to see through to the end. Depending on your project, the length of the renovation and the overall cost, you will find there are several different types of Property Development finance for you to consider. It is important to research these thoroughly before signing up for them as the cost implications and purpose for each are slightly different.
Re-mortgaging: If you are considering re-mortgaging as a way to raise the capital you need for your renovation then it is useful to discuss this with a professional financial advisor or mortgage broker prior to making your decision. Different lenders will offer up re-mortgaging for different reasons, for example, one may offer the re-mortgage for an emergency repair to the property, where another may offer it for development reasons and there will be varying rates attached to different re-mortgaging options too, so it is important to bear those in mind along with the loan term and fees. The term for a re-mortgage tends to be longer than some other funding methods.
Home Improvement Loans: Home improvement loans are secured loans that commonly range from £3,000 to a million pounds and can be offered for a loan term of anywhere from 3 to 30 years. Lenders of home improvement loans tend to have slightly more flexible that mortgage lenders so those with CCJ’s or defaults, the self employed and those on benefits or pensions have a higher likelihood of securing this kind of loan. In turn, the interest rates are likely to be higher on this product.
Bridging Loans: When considering taking out a bridging loan it is important to consider the cost implications. Because they are a much quicker source of finance than some and have more flexible lending criteria than traditional lending methods, you will find that the interest rates and fees can be much more expensive. Bridging loan lenders also offer loans at varying LTVs so the amount you can borrow from one lender to another can differ greatly. It is useful to consult a tool such as the Barclays bridging loan calculator to get an initial understanding of how much you can borrow and at what cost. The beauty of this kind of loan is the speed and flexibility rather than cost effectiveness.
Personal Loans, Extended Overdrafts and Credit Cards: These finance products tend to be provided with lower interest rates (dependent on your own personal financial circumstances) and for some, the finance on overdrafts and credit cards may even be 0% for a reasonable period of time. Money Saving Expert is a great place to look for this type of finance and there are some really useful tools to assess your eligibility, the amount you might be able to borrow and how much interest you are likely to pay. These products tend to be more cost effective for smaller shorter-term projects.
When seeking finance for any home renovation projects it is key that you factor the overall cost of the loan, the repayment schedules, the length of the loan and any conditions or fees that come with the loan before making a decision. These can be complicated solutions so if you find yourself in a whirlwind of funding it might be best to seek advice from a professional.