Funding Options When Renovating Your New York Home

Renovating your newly purchased New York property is one of the most effective ways to make it feel like home. A recent study found that 90% of people who bought a home in the last year have renovated it. But with the average home renovation cost coming in at $22,000, you may be concerned about how to pay for the renovations you long for. So, let’s discover how to find the money to finance the renovations in your new New York home.

Use Your Credit Card

Even though New Yorkers hold an average credit card debt of more than $3,500, 30% use their credit card to pay for home renovations that cost less than $5,000. Meanwhile, 25% pay for renovations costing between $50,000 and $200,000 with their credit card.

The biggest advantages of using a credit card to fund your home renovations are that it’s convenient and immediate. Many credit cards offer rewards when you spend, so you could earn cashback or gift cards on your renovations. If you decide to use a credit card, opt for one with 0% interest. Many providers have 0% introductory rates.

Otherwise, be wary of the high interest rate you could pay which is currently just under 25% APR.

Take Out a Secured Home Loan

Last year, 16% of homeowners took out a secured home loan to finance their home renovation. A secured loan means your home is used as collateral against the value of the loan and the lender gets rights over your property. In return, you get a lower interest rate and a longer loan term.

If you’re wondering how to get a secured loan, you’ll be pleased to know that it’s a simple process via a secured loan lender or secured loan broker. Once you submit your application, it’ll be approved and the money granted within 1 to 3 weeks. When taking out a secured loan, make sure you can afford the repayments as this will ensure your home isn’t at risk.

Utilize Cash from Your Previous Home

Research shows that New Yorkers who downsize could save $20,000 per year. Many homeowners do this as research shows that 5% of people use cash from a previous home sale to fund renovations costing $5,000 or under, while 22% use cash from their former home to pay for larger renovations.

If you’ve got cash sitting in your bank account, it’s always best to put it towards the cost of doing up your home. With cash, you haven’t got to worry about interest rates or paying anyone back. It also means you’re only paying for the renovations that you can afford.

The downside is that you may have to wait longer than you’d like to completely overhaul your property. And, if you spend all your money, you won’t have anything left to cover the cost of an emergency. Such as a sudden medical bill or car breakdown.

Apply for an Unsecured Loan

An unsecured loan is a loan that doesn’t require collateral, such as your home, to get it. When you take out an unsecured loan for renovations it’s often called a home renovation loan. To qualify for an unsecured loan, you’ll need to have a high credit score around the 610 to 640 mark as lenders see this type of loan as riskier than a secured loan.

Due to the risk involved, you’ll likely find that you can only borrow a small amount of cash. This is okay if you only have a small renovation to do on your new property. But if the New York home you’ve bought needs a new kitchen, new bathroom suite, and replacement flooring throughout, you may be better off considering a different funding option. Unsecured loans aren’t popular among homeowners right now as just 2% of people use them for renovations costing between $50,000 and $200,000.

Borrow from Family

Parents can be the most generous people in the world and are sure to want to help you so that you get the home of your dreams. Statistics show that 68% of parents make a financial sacrifice so that they can help their grown-up children.

Meanwhile, the average amount of money parents give to their adult children to put towards their house is $39,000. If you know your parents have savings, see whether they’re prepared to lend you the cash for your renovations. The benefit of this is that they’re unlikely to charge you interest and you can agree on your own repayment terms together. You’ll also have access to the money immediately which will let you get on with doing up your home as soon as possible.

Some parents may also be prepared to gift you the money and take it out of your future inheritance, so you haven’t got to worry about paying it back. Between 5% and 8% of homeowners use gifted or inherited money to pay for their home renovations. So this is a popular and effective way of paying for a home makeover.

Sign Up for a Personal Loan

Many homeowners use the equity in their homes to borrow cash to fund their home renovations. The problem with being a new homeowner in New York is that you won’t have any equity to play with. An alternative option is a personal loan. You have two options here; you can get in touch with lenders directly and take out a personal loan directly or you can ask the contractor who’ll be doing the work in your home if they offer a finance option.

It’s common for contractors to have a lender they work with so that their customers can pay for their renovations. Just make sure that the interest rate and repayment terms are favorable and comparable to the rest of the market.

Your new New York home should be one that you adore and love coming home to time and time again. This usually means completing hefty renovations, so make sure you choose the best financial option for you when it comes to funding your project.