Becoming a homeowner is one of the most exciting life milestones you reach, representing a bright future in a place to call your own – and your first independent freedom from the perils of the rental market.
Though getting on the property ladder remains a challenge for many in the UK, getting on it at last is all the more relieving. That is, until you start renovating. Renovating a new home can feel costlier than clinching it in the first place; how should you approach the finances of a home renovation?
Planning Your Budget
In order to know exactly how to approach the finances of your home renovation, you’ll of course need to know how much money you’ll need in the first place. This means having a relatively clear idea of what you’re hoping to achieve with your renovation, and doing all the relevant research to put a meaningful plan together.
Your renovation budget should include labour costs for the various non-DIY tasks or projects you may be hoping to achieve, as well as tools and materials for your own DIY additions to the home. Your financial planning should also include some breathing room, for contingencies where bad weather or even bad tradespeople add unexpected costs to your renovation.
Paying for It
The difficult bit is securing the funds necessary to cover everything. Most dream renovations are done piecemeal, according to what’s in the savings account and over a long period of time – but there are ways to get done with your renovation quicker, even if you don’t have enough saved back as a household.
Borrowing money is not an inherently poor financial decision, and can indeed be a highly viable way to getting ahead with your home. This is particularly true as you are building value and equity in your home, which will pay dividends further down the line. With this in consideration, secured loans that use your home’s value as collateral can be a key route to accessing the funds you need.
Managing Debt
However shrewd the borrowing of money for your renovations may be, being in possession of debt can be a worrisome experience. As such, preparing for financing your renovations should include preparations for managing whatever form of loan you ultimately take out. Essentially, you shouldn’t be agreeing to repayment terms that you can’t keep to, and you certainly shouldn’t be borrowing above your medium-term affordability. Where possible, prioritise, and even overpay, your loan each payday, to reduce its long-term impact.
