Wednesday, January 3, 2018

When Is It Worth Borrowing Money to Improve the Value of Your Property?

Renovations and extensions can add a lot of value to a property, but getting the right funding
to do so usually isn’t easy. While it can always come out of your own pocket, if you’re a budding
real estate developer or if you find success flipping houses, it’s important to realize that the
source of your funding will play a key role in how much profit you make.

Borrowing large sums of money

A secured loan is often the best method of getting a large sum of money for an expensive
renovation or extension. This is great if you want to completely redo a house to give it a
modern look or if you want to add a loft extension. These are the types of high-value
improvements that can seriously boost the value of your home, but they do require a lot
of time, effort and money. So in other words, if you’re aiming to boost the value of your
home with something drastic that completely changes the look and function of a property,
taking out a loan or borrowing money can be a great option if you can still make a profit
and have a high chance of selling the property in the first place. Just remember that a
secured loan is usually on your property, so if you fail to make a sale you could end up
losing it entirely.

A personal loan is typically a little more expensive but it means you don’t need to add on
to your mortgage and you can be approved a little faster. The interest rate will be a little
higher, but if you’re already in the process of selling your home and want to add some final
touches before you list your property on the market, an unsecured personal loan is typically
the better choice provided you have the credit rating to approve it.

Smaller decor changes and upgrades

Getting the most out of your property sometimes means making smaller changes and not
large sweeping ones. For instance, something as simple as repainting your property and
fixing cracks in the wall can completely upgrade its appearance and give you a lot of extra
value. The idea here is that you want to prepare your property in a way that it sells a dream
and not just a home. You want to entice buyers into buying your property because you want
them to see how it can look in its best shape. Don’t give them a blank slate by having white
walls and no furniture. Give them something to be in awe of.

These type of changes usually aren’t worth taking a loan out for because they’re much lower
in value. Getting a can of paint and some brushes to do it yourself is fairly cheap even when
you consider the time you spend, and hiring a contractor isn’t that expensive either unless you
don’t shop around for a better quote.

So to conclude, only consider borrowing money to increase the value of your property if it’s out
of your price range. If it’s something drastic like a new kitchen, a loft conversion or even an
extension, then it’s usually well worth the price provided you pick the right type of loan to fund it.

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