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Renovation and redecoration is a vital part of the upkeep and maintenance of every household. Expected renovation may still give the owner some time to prepare for the upcoming expenses. However, with sudden damages options like loans and credits may seem like the only way to carry out the project of home improvement.
Here, using a loan can be a good idea. Though, finalizing this decision depends upon the need of the housekeeper and the repayment of the interest rate.
In some cases, home loans can have an interest rate as low as 2.5%. While in others, the interest goes beyond the roof with a rate of 35% or more. Yet, averagely, the interest must lie anywhere from 10% to 30%.
Why Personal Loan May Not be the Best Idea?
A personal loan can be a lucrative idea provided that the rate of interest is in the lower bracket. This makes bearing the loan manageable. Conversely, loans asking for a much higher rate of interest can be painfully costly.
Personal loans usually are unsecured in nature hence do not require a collateral. But, since they are unsecured they definitely do demand a higher interest rate. This is why taking a personal loan is not the best idea.
Now, if we talk about loans with a lower interest rate, they usually require collateral. For instance, home equity loans require collateral. So, one way or the other, personal loans are not the greatest option for house improvement.
Another alternative with personal loans is to make use of the fixed term option which comes with these loans. These loans come with a term of 1 to 7 years and when budgeting for a possible monthly payment, this aspect can be of help.
Now one very important consideration with loans is that when it comes to a really deplorable condition which needs repair, the housekeeper must finance his home needs immediately. As at least paying a higher rate of interest can save him from the prolonged damage of the ravaged home.
How to Obtain the Most Optimal Loan: No Credit Check Loans
If you are adamant on financing your needs via loans or you just find this alternative easier, then this is how you should go about it.
When someone applies for a loan, the loan lender measures the credibility of the applicant on different dimensions. For instance, the credit score is scrutinized before the approval of the loan can be sent through. Along with that, other credit-related aspects are also dug in.
Now, what this does is reduce the chances of the applicant of obtaining a loan for their requirements. Thus, the applicant must seek the loan through no credit check loans method.
There are several benefits to taking a loan without a credit check. The first benefit is that it allows the applicant to obtain loans without the set restriction on the credit score. It allows the loan to be granted to any applicant who has a repayment guarantee via a steady income.
Many loan institutions have a very tedious procedure of credit check which poses as an obstruction to urgent financing needs.
The loan lenders in ‘no credit check’ are cooperative and prepared to risk the conventional procedure. They do not dwell on the credit history.
In short, applicants can expect obstacle-free financial support regardless of whether the credit is low or high. This method also secures the privacy of your personal financial information.
Some Good Alternatives
Now that we have discussed the different pros and cons of Personal loans, we would like to bring to the light the other methods of financing. There are several ways to finance home improvement projects without getting more debt into our lives.
1. Home Equity Lines of Credit (HELOCs):
HELOCs, also called home equity loan might just be the perfect financing mode for you. Using HELOCs requires a considerable amount of equity in your house after at least 20% of the loan has been processed.
A home equity loan is a great option for expensive projects that will add value to your home and make it a more investable house. For smaller projects that may not be a substantial, HELOCs are not best alternatives.
A great upside of HELOCs is that it requires a much lower rate of interest as compared to personal loans, since, HELOCs are secured in nature.
2. Title I Loans:
Title I is a property improvement loan program which is also a pretty good alternative to personal loans. Title I also removes the equity need of HELOCs as it doesn’t need for the applicant to have equity in their homes. The Title I loan program allows a loan amount of no more than $25,000 for a fixed term of 20 years. This program is curated for single-family homes with fixed Interest rates.
3. Credit Cards:
Credit cards for the use of home improvement projects can be considered as well. Still, to make the most of this alternative the applicant must pay off the entire debt in a short amount of time. For instance, in a year and a half, the credit must be paid off as this will give the applicant the option of 0% introductory APR. This purchase offer allows the applicant to finance their homely needs interest-free.
4. Savings & Smart Steps:
Probably the best way to bear the expenses stemming from home improvement is by start saving. Doing this well in advance will not only save the people from debt but will also give them more flexibility and autonomy. However, this will not prepare the home-keepers for urgent situations which are usually unforeseeable.
Another way to finance a minor project is to divide it into phases. This means carrying out divisible projects into different time frames and phases. This will allow the home keeper to prepare for each phase as it comes. A great example of this method is remodeling a spare bathroom, as they will already have their master bathroom so they can take their time with the spare bathroom. They can begin with tiling, painting and then go up to replacing light fixtures and adding in decor.
It is very important to make healthy financial decisions as they can have a long term implication. Hence, the home-keepers must weigh their option carefully and read all the related risks and liabilities.