What is home equity?
Your home equity is the difference between how much your house is worth, minus how much you owe on your home loan.
For example, if your house is valued at $550,000 and you have $350,000 remaining on your home loan, your home equity is $200,000. Nice and simple.
When deciding if borrowing money to renovate your home is worth it, it’s a good idea to weigh up if the renovations will increase the value of your home. You might not want to invest $40,000 into a new kitchen if it will only increase your property value by $15,000 when you sell. A new kitchen might be exciting in the short term but consider what over-investing might mean for you in the long term.
If you aren’t sure about you options you have available to you, have a chat with a People First Bank home loans specialist.
Home renovation loans
Another finance option that can help cover your home renovation costs is a construction loan.
These are a pretty unique type of loan: the loan amount is given to you in staggered payments over time instead of as a single upfront payment.
This means you can withdraw your funds gradually while you renovate, so you only pay interest on the amount you have drawn on.
At People First Bank, we have a few different construction loans for you to compare rates and repayments on.
Mortgage refinancing to cover renovation costs
Mortgage refinancing essentially means replacing your current home loan with a newer one.
You can refinance with us if you have a loan with another financial institution, or if you already have a home loan with People First Bank. There are plenty of reasons to refinance your home loan and one common reason is to simplify your finances while you renovate your home.
Refinancing can help you simplify your repayments, consolidate your debts, take advantage of changing interest rates, or find a loan which better suits your changing needs.
For more about refinancing with People First Bank to help plan renovation costs, you can reach us here. We can also chat about any of the other finance options listed above.
These articles may help you
Home loans
Six reasons to consider refinancing your home loan
Reasons why you should review your home loan and consider refinancing.
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Reasons to refinance your home loan
Did you know you could save money by switching your home loan? We explain how you can save by refinancing.
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