Financing that makes your dream home possible.
When it comes to renovating your home, the task can be incredibly stressful. It is not only due to the inspiration and time that it needs, but also because of the funds that it requires. Even something as small as a change of flooring doesn’t come cheap. If you choose to go with a full room remodel, then it can cost you a small fortune.
That’s where home improvement loans come in.
As a financing product designed for home renovations and enhancements, a home improvement loan can help you make your required changes without putting yourself under strain. To learn what is a home improvement loan and what does it involve, here’s a lowdown on this important financing option.
It’s a Fixed-Term, Unsecured Loan
A home improvement loan is an unsecured loan, which means that you don’t have to put any collateral to receive the financing. Instead, its approval is dependent on other factors such as your credit scores, net income, and debt-to-income ratio.
It is also a fixed-term loan, which means that it comes with mutually agreed upon repayment dates. After taking this loan, you need to make equal monthly repayments until the loan term ends and your debt is paid off.
You Can Use It for Renovations or Repairs
Since a home improvement loan is unsecured, it is not tied to any of your assets. This also makes it a personal finance product, where you can use the loan amount for any spending decision.
In this case, that particular spending is focused on your home. As a result, you can use the approved loan amount for any renovations, repairs, or upgrades that you want to make to your home.
It Comes at a Higher Interest Rate
Now that you know what is a home improvement loan, it is time to understand its larger functionality as a financing product.
First and foremost, a home improvement loan comes with faster disbursements. This means that you don’t have to wait for months for the loan application to be approved. In fact, most lenders only take a couple of days after your application to disburse the amount.
The loan also comes with wider accessibility. Since it’s a personal loan, you can get it from several lenders. This gives you a vast variety of options to choose from and pick a lender that suits your requirements the most.
It’s also important to remember that home improvement loans mainly differ from other personal loans due to the amount that they usually approve. The other functions of the loan mostly remain the same.
The Interest Rates Are Higher Than Secured Loans
The interest rates for home improvement loans are competitive, but they are also higher than secured loans such as mortgages. This is a critical point to understand before you take out this loan.
However, since home improvement loans come without tying any of your assets as a collateral or putting you through under months of assessments, these rates are often considered standard in the finance industry. They are also justified due to the loan’s overall benefits.
You Can Get These Loans Through Popular Lenders
After learning what is a home improvement loan, you can apply for this financing through popular lenders such as banks and credit unions. In case you have bad credit, you can turn to lenders which specialize in facilitating such loans at higher interest rates.
When you are in need of critical repairs or much-needed improvements, home improvement loans can fulfill your requirements on an urgent basis. However, you should think long and hard about the commitment to monthly repayments that come afterward. This makes it easier for you to determine whether you will be comfortable with the repayment terms that come with your loan.