Home improvements can’t always wait for your credit score to improve, which is why we’ve provided all you need to know about applying for the best Loans for home improvement with bad credit below.
The pros and cons of different renovation finance options
There are a few options for funding your home renovation projects. Of course, if the choice is to borrow money, deciding on the right option for you will depend on your personal circumstances. Here are some of the pros and cons of the different loan options for renovations:
Home loans
Presumably, you purchased your home using mortgage finance. Accessing either the redraw facility on your home loan or refinancing your home loan to unlock equity is a commonly used method of funding home improvements.The benefits of this strategy are that you can use the equity you already have in your home, meaning that the lender has some form of security to lend you further funds. Also, depending on how your existing loan is structured, you may be able to access a redraw facility without needing to submit a loan application. Be sure to speak with your bank or lender about your situation in this regard.
But before you make any decisions regarding your home loan, be sure to seek independent legal and financial advice that is suited to your personal circumstances and financial situation.
Construction loans
Otherwise known as building loans, construction loans are lending solutions for building (or renovating) homes. A building and construction loan is unlike a personal or home loan in that the funds are paid to you via instalments.One of the main advantages of construction loans is that you only pay interest on the money you have drawn down, not on the entire loan balance (until you have drawn the total loan amount). On the downside, these loan products are generally for larger loan amounts and often aren’t suitable for smaller scale reno projects.
Secured and unsecured Personal Loans
Personal loans aren’t just for a car purchase; you can also use a personal loan to cover the cost of doing up your house! An unsecured personal loan allows you to use the money for whatever you wish! Unsecured loans often come at a slightly higher interest rate than a secured personal loan.
Renovation finance
Home renovation finance is a solution offered by lenders to provide the funds you need for your project. Depending on the credit provider, a loan for renovations may, or may not, be secured.Applying for home improvement finance with bad credit
Whenever you go to borrow money, you need to do your research. Just as you’d look at different builders to complete your improvement plans, if you’re looking at lenders who offer renovation finance and you have bad credit, it’s essential to do your homework.
If you’re ready to learn more about applying for the best loans for home improvement with bad credit, reach out to our team or apply online.
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Four tips to help you get approved for a loan with bad credit sooner:
Tip 1
Access a free copy of your credit report to identify areas where a potential lender may ask you to explain. Your report will show more than just your credit history; it will detail any missed payments, defaults, court judgments and open credit accounts. Paying bills by direct debit can be a safe way to ensure you don’t miss payments!Tip 2
Improve your financial situation by searching for cost savings in your budget in the months leading up to the application so that you can demonstrate responsible spending and saving habits on your bank statements. Suppose you can save money to put towards your renovation or loan? In that case, it can be a powerful bargaining tool to negotiate a higher loan amount, better loan terms or a more attractive interest rate.
Tip 3
Take comparison rates with a side of caution. A comparison rate can be a great tool when comparing loan products, such as a personal loan. The trap with relying on comparison rates is that they will not show how strict the lending criteria of the lender is. Often the indicative interest rate advertised is reserved for those with good credit history. Applying and being declined can drive credit scores down further by adding another credit enquiry onto your file. Avoid applying for multiple different credit products with multiple different lenders at the same time.
Tip 4
Apply for a loan with a lender that offers flexible loan options, such as the option to make additional loan repayments. Paying off your loan early could save you interest in the long run.Frequently Asked Questions
Is home renovation finance the same as a Personal Loan?
Our Home Renovation Finance solution is effectively secured or unsecured personal loans that can be used for home renovation purposes.
Are unsecured personal loans risky?
Everyone’s financial circumstances are different from one another. Unsecured personal loans may provide fantastic flexibility, however they can have slightly higher interest rates than our secured personal loans for renovations.
What interest rate could apply to my Personal Loan for home renovations?
Our interest rates vary depending on your overall credit profile. This includes, but is not limited to, the stability of your employment and residence, credit history, income and banking conduct.
Finance One means:
Fin One Pty Ltd – ABN: 80 139 719 903
Australian Credit Licence: 387528
Disclaimer: The information above is of a general nature only and does not consider your personal objectives, financial situation or particular needs. You should consider seeking independent legal, financial, taxation or other advice to check how the information relates to your particular circumstances. We do not accept responsibility for any loss arising from the use of, or reliance on, the information. Please note that approvals for loan applications are subject to satisfactory documentation being received to properly assess the application. Normal lending criteria apply. Fees and charges are payable. Terms and conditions apply.
