In the UK we are obsessed with DIY. Before the recession, we saw the property market boom with many people buying houses, renovating them and making a profit. But in recent years, the crash has meant many of these properties were harder to sell.
Currently, homeowners tend to be stuck in the middle ground. According to statistics, 40 per cent of owners carry out home renovations to improve the appearance of their home, while 33 per cent do it to add value to their property.
In terms of home improvements, they all can add a different value to your home. The most valuable asset would be installing a conservatory. These cost on average £5000 but can add an additional £5700 on to the value of your property – over a 100 percent profit. Spending time landscaping your garden can add up to 88% return on investment, whereas a bathroom and kitchen will add around 50% profit.
The amount of money you are willing to spend on home improvement is specific to your individual situation. The bigger the job, the more costly it could be. Another consideration to that into account is the labour time needed. Do you have the capacity and experience to carry out the job yourself, or will you need to hire a builder? This can dramatically affect the price too.
With any alterations to your home, it is important that you carry out your homework before starting. It is crucial you know exactly how and what you are paying for. There are a number of financial sources to consider:
Savings – If you have the money tucked away to pay for home improvement, then this would be the simplest and highly recommended option. You won’t need to worry about credit, APR and repayment plans.
Credit – If the job is very expensive, then you may want to use a credit card to cover the costs. A card that offers a 0 percent interest rate would be beneficial. The higher the cost, the higher the likelihood that you might need to take a loan out to pay for the work. It is best to shop around to ensure you are getting the best deal and have manageable monthly repayments.
Mortgage – If the proposed improvements look to add value to your house, or if you already have equity in your property, you have the option to increase your current mortgage. An advantage of doing this would mean the interest rates are likely to be significantly smaller than those of a loan. The only downside is that you would be paying more back as its over a longer period of time.
If you do decide to use credit as your financial option, we would recommend getting a credit check and report first. It is not unheard of for homeowners to discover issues with their credit after they have already started planning the work. This could include having builders contracted, materials ordered and plans agreed without having a loan accepted.