Since the onset of the coronavirus pandemic, we have all been spending a lot more time at home. This newfound time in your house may have inspired you to make some changes around the house, such as a basement remodel or turning that spare room into a home office for your remote work. Renovating your home can be a major project, and there are a variety of ways to pay for it. Whether you are doing something as simple as a kitchen or bathroom remodel, or something major like changing your home’s appearance or adding an extension, these projects can become quite expensive. There are many ways to pay for these projects, such as cash, a credit card, or a loan.
The best and cheapest way to pay for anything, especially renovations, is cold, hard, cash. If you don’t have enough savings to complete your project, and can afford to wait until you do, there’s no better time to start than now. Start improving your bank balance by setting aside a certain amount of money each time you get paid. There are usually ways to have a portion of your paycheck automatically moved to a separate account, so you won’t even notice where the money goes. Then, when you have enough saved up, get that dream kitchen you’ve always wanted interest-free. If you do have enough in savings, there are a few questions you should ask yourself before diving right in to your big home improvement project. First, you should make sure that you still have enough in your emergency fund to pay for unexpected expenses after your project is complete. You should also make sure that you don’t have too much debt. If you have some high interest debt hanging over your head, you should probably pay that off first rather than spending money on a renovation.
If you can’t wait to save, or are considering a particularly pricey project like an extension or complete remodel, you should consider borrowing. For most renovations, this means topping up your existing mortgage. Banks are usually willing to lend for home improvements, especially if you make your payments and have a good rapport with your lender. The most common option for these types of loans is staying with your current provider, and you can choose to pay off the top up either over the remainder of your current mortgage or a shorter set term. Until recently, you would only be able to draw down these funds on a phased basis, by providing receipts for the work after it’s completed. Now, you only need to provide estimates for expenses of up to €50,000.
Before going with either of these options, however, it’s important to consider the additional costs that come with a renovation. You will need to factor in the interest rates if you are going with a mortgage top-up, and for this reason it’s important to shop around and find the lowest rates possible. For a major renovation or an extension, you will also need formal estimates from your architect, a formal valuation from a surveyor and solicitor’s fees, which can cost upwards of €1,000 when all is said and done.