The best thing about home renovation is that you can remodel or renovate and change things the way you wish it to be. Adding a new touch to your place can be quite exciting. However, sadly, this excitement comes with a lot of expenses. But, there is a way out. And, here in the article, you will get to know how to renovate your home even when you are short on money.
Simple tip: Opt for a home renovation loan.
Yes, this loan will help you to give your home a new look without worrying much about the expenses.
Here’s how it will help:
1) The interest rates on this type of loans vary from 9% to 12.99%, and the maximum loan amount one can get is around 90% of the property’s market value.
2) The loan repayment tenure goes up to 30 years which offers flexibility to the borrower to repay the loan in easy EMIs.
Even if you don’t need up to 90% of the property’s market value, the point is you can get the home renovation done.
Now, the question is, it so easy to get a home renovation loan? Through this article, I will walk through you so that you know how to get it approved quickly and without any hassle. The following tips will help you to get the loan approved in less time even with the comparatively higher loan amount.
Tip 1: Raise your credit score
A higher credit score denotes that it will be easier for you to acquire a higher loan amount.
How do you improve your credit score? One of the common ways to raise your credit score is by paying all the pending credit card balance. If you are already having a huge amount of unpaid credit card bills, this can put you under trouble as your credit utilization ratio makes up to thirty per cent of your overall score. Try to pay the balances as early as possible to lower the debts and maximize the credit score.
How to repay in a considerably short span? Simple, to increase the credit score by paying the debts, you will have to save some extra money.
Here’s how you save money:
- a) Reduce your hefty expenses.
- b) Cut down unnecessary expenses.
- c) Make it possible to save more by adding one or two additional sources of income. Moreover, since the loan-to-value (LTV) ratio is just 80% for a home renovation loan, you need to keep some extra money to pay the remaining 20%. Having another source of income will be helpful.
If you are the existing customer of the moneylender or bank from where you are taking the loan, you might get comparatively higher LTV.
Tip 2: Submit the estimation of renovation cost from a registered architect or an interior designer
The first thing is to get an estimated cost of home renovation. Since lender assesses your home loan based on the estimated cost of the project, ensure that the estimates are perfect so that you can take the confidence of the lender well.
Ask your interior designer or the architect to make proper documentation of home renovation and cost estimation.
Tip 3: Pay down the current debts and avoid new debts
Before the approval of the loan, the lender will scrutinize whether you can receive the loan or not by calculating your debt-to-income ratio. This ratio will then conclude whether you are eligible for the loan or not. And if yes, what amount of loan you will receive. There are chances that the lender will turn down the loan request or offer very low mortgage if you are carrying a huge amount of debts.
You can pay your debts before applying for loan approval; this will eventually help you to get a better mortgage value as the debt-to-income ratio would go down.
Also, one must note that even after the approval of the mortgage, it is crucial that you avoid the new debts as the lender might re-verify your credit once again before closing. And if during the re-verification process, there are any disclosures of the new liabilities than there are high chances of your approval getting rejected. It is always better to be on the safer end by avoiding any major purchases until you have closed the loan amount.
1) In some cases, you can also add a non-occupying co-borrower as it would increase your loan amount. However, your co-borrower must meet your lender’s guidelines.
2) High salary will also help you in getting a high loan amount.
3) Find online loan creditors, use their app for instant loan disbursal.
The bottom line is that you must channelize your attention towards improving your finances and credit score as it will always increase the chances of you qualifying for a high loan amount. Ensure that you set up a realistic plan based on your current financial status. Consult some personal finance expert and try to stick around the plan for smooth approval ofpersonal loan for home renovation.