5 ways to pay for home improvement

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1. Personal Savings

Using your personal savings to pay for home upgrades is actually making an investment. These improvements can have various effects on the value of your house. For example, putting in a new kitchen can raise your house’s value by as much as 5% and a modern bathroom could raise it by 3%. If the cash is readily available, using it is a no-brainer. However, if it’s tied up in something like a fixed rate bond, you have to consider whether it’s worth it to pay all the associated penalties to get the money. Withdrawing from your ISA will also prevent you from topping up your allowance in the same year. However, the real issue with using your personal savings for home improvements is that the money isn’t secured. If the people you hire turn out to be fraudulent, there’s nothing you can do to get your money back.

2. Using a 0% purchase credit Card

The best thing about using a credit card to pay for renovations/improvements is that in case the company turns out to be fraudulent or if they suddenly go under, you can always claim your money back from your card provider. This applies to total bills ranging from £100 and £60,260. This is taken care of in the Consumer Credit Act of 1974 and the Consumer Credit Directive.
Paying with a 0% credit card is a smart move even if you have savings. Using the credit card will ensure your investment is protected and you can then use the savings to pay off the credit card during the interest-free period.

3. Interest-free purchases with cashback

This is a credit card that will offer you both an interest-free payback period and a cashback which is usually a percentage of your expenses. The good thing about this is that you can pay for your home improvements minus interest and the cashback is a little like a discount on the purchases you make. These offers are usually around for only a limited time only so be on the lookout for one so that you don’t miss out.

4. Personal Loan

A personal loan may be the best choice for you if you’re going to make major upgrades that could cost you £10000 or more. If you’re going for a personal loan, look for a loan provider who will offer you the best deal. Don’t just go to your current bank, instead shop around to see what other offers you can get from other banks or building societies. You want loans that will come with a low APR and a payback period that is fairly comfortable.

5. Using your House’s Equity

This should be your last resort because borrowing against your home’s equity can leave you with a very large debt. The money borrowed won’t necessarily be offered at the same rate as your mortgage and may even tie you in for a longer period. If however, you’re about to clear your mortgage, you can move the whole loan to one lower rate.

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