your property is the best way of increasing its value. But
the question arises where to acquire such a large sum to
fund restoration work. Now here is an option through which
borrow the required sum specifically to improve your home.
Improvement loan, which is somewhat an extension
of mortgage, your mortgage lender will be more than happy
to lend you the money, as you’re increasing the value
of property that they own until you have paid back your mortgage.
you know that you can actually buy your property and
organise a home improvement
loan at the same time. The way to go about
this is by adding up the home improvement loan and the mortgage amount and check that it doesn't add up to more than the value
of the property. After you buy your home, you can normally arrange
a further loan of up to around £25,000.
the question arises as to why borrow from a mortgage lender.
It pretty simple, since this is a secured loan, you not only
can get a lower interest rate, but also have the advantage of
being able to borrow the money at your mortgage lender's standard
variable rate, which should be lower than any personal loan rates.
Even if you won't receive the mortgage rate, you should at least
find yourself able to obtain a favourable loan rate.
And if you’re
not able to get enough money from your mortgage lender, then
some other loan providers will offer special home
improvement deals. The final cost could well be more or even
less than you originally budgeted for, but be sure to borrow
only the money you actually need.
Home equity loans
There are many reasons as to why people go in for home equity
loans - in order to pay for their improvements to their home,
children’s education, to buy a new car, or to go on a
holiday. While there are others who may want to receive a regular
income source so that they can pay for residential care, or
just the cost of care.
But if one of these is your reason for releasing a home equity loan, then you need to ask yourself few question like if you
actually qualify for an equity release scheme? Do you completely
own your property? Is your mortgage fully repaid?
Otherwise you’ll not qualify for a home equity loan from
certain lenders. Others will not make this stipulation, but it
is worth finding out so you do not waste time filling out failed
applications. There are three types of home equity release:
Under the Home Income plan you generate a monthly income, from
a loan usually invested in an annuity, which not only pays your
income but also the loan interest. To guarantee your income you
should choose a fixed interest rate. Note that you lose the money
paid into an annuity when you die unless you take capital protection,
which can refund some of the annuity.
or Mortgages allows
you to use money as you like. It uses the equity of your home
to allow you to borrow a percentage of
its value, whereby you agree an interest rate on the loan and
repay that over a period, and the loan is repaid when you sell
the property, or by your next of kin should you die. Sometimes,
you may get a roll up loan, where you don't even have to repay
the interest, which is instead added to the loan you owe.
In Home reversion you’ve to actually sell your home to
receive the lump sum or the income. You then live in the property
for a nominal rent.