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YOU’LL NEED A WEDGE TO HANG THAT DOOR
Watch 6:32

YOU’LL NEED A WEDGE TO HANG THAT DOOR

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Advertising Feature By Mortgage House
  1. Home
  2. Renovating

The best ways to finance your next renovation project

Here's how - by Mortgage House
  • 29 Nov 2017
The best ways to finance your next renovation project

 Choosing to renovate is a big step. That’s why making sure you have all your financial bases covered is important. At Mortgage House, we have a range of home loans that can help you with your property goals. To find out which one suits you it is important to start by understanding the best ways to finance your next renovation project.

  1. Consider a variable home loan

Variable interest rate mortgages are the most popular kind of home loan. Variable rates are interest rates that can increase or decrease over the life of the loan. Both external factors, such as the Reserve Bank’s setting of the official cash rate, and internal factors, such as the cost of administering and financing the loan, can influence variable interest rates. Variable interest rates are generally lower than fixed rates, and standard variable loans can be more flexible, with features such as access to Offset and Redraw facilities, and the ability to make extra repayments without being penalised.

  1. Investigate whether a fixed rate loan may be suitable

For some people, the security of a fixed interest rate loan may be a more suitable option to finance their renovation. Fixed loans are mortgages where the interest rate is fixed for an agreed period, usually between one and 10 years. Having a fixed rate loan means you will know exactly what your repayments will be over the fixed period. That can make budgeting easier, and when it comes to renovations, sticking to a budget can be important.

  1. Don’t forget about your equity

Financing a renovation doesn’t have to mean taking out a new loan. If you have been paying off your current mortgage for a number of years, you have probably built up equity in your home. Equity is calculated on the difference between what your home is worth now, and how much money you still owe on it. For example, if your home is worth $500,000 today, and your mortgage is $250,000, you may have up to $250,000 equity in your home. You can tap into your equity to renovate your home, or use it for a range of other reasons.

  1. Take a look at construction loans

If you are planning a major renovation, it can be a smart move to look at whether a construction loan is a suitable option. Construction loans operate almost exactly the same as regular home loans, but with one significant difference. With a construction loan, you can stagger the drawdown of the loan as your renovation reaches certain agreed stages. If you are using a builder to renovate, ask for a fixed price contract. Once there is proof a construction phase has been met, the bank or lender will release the funds for that stage. The benefit to you is that you make repayments based on your loan balance that will only be charged on the amount of money that has been paid out, rather than the whole mortgage. You may need to get pre-approval for construction loans, so take that into account when working out whether they are the right way to go. Construction loans operate as a normal mortgage once all the payments have been made and the renovation has been completed.

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YOU’LL NEED A WEDGE TO HANG THAT DOOR
Watch 6:32

YOU’LL NEED A WEDGE TO HANG THAT DOOR

{headline}

{headline}

A guide to adding a second storey to your house

A guide to adding a second storey to your house

Everything you need to know about money in your 50s

Everything you need to know about money in your 50s

Everything you need to know about money in your 40s

Everything you need to know about money in your 40s

Everything you need to know about money in your 30s

Everything you need to know about money in your 30s

{headline}

{headline}

Everything you need to know about money in your 20s

Everything you need to know about money in your 20s

The beginner’s guide to investing in 8 simple steps

The beginner’s guide to investing in 8 simple steps

5 finance words you need to know

5 finance words you need to know

{headline}

{headline}

Home loan application advice for first-time buyers

Home loan application advice for first-time buyers

5 money-saving challenges you should try this year

5 money-saving challenges you should try this year

5 easy ways you can be better with money

5 easy ways you can be better with money

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5 ways women can take charge of their financial future

How to recover if you overspent at Christmas

How to recover if you overspent at Christmas

How save money when you’re a renter

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5 ways using the share economy can make you money

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