Buying a Fixer-Upper? 4 Ways to Pay for Renovation Work
There’s no doubt that buying a home for the first time can be an expensive situation to be in. But, many new homeowners say that saving up for a deposit and giving up on luxuries for a little while is definitely worth the effort. Many first time homeowners opt to buy older homes in need of some renovation in order to save money on the overall price, but if you’re planning to do this, don’t forget to factor in the cost of renovating your home and getting it to where you want it to be. Here are some options to consider if you’re considering buying a ‘fixer-upper’.
#1. Save Up More:
If you’re lucky enough to be in a position where you can comfortably save up a substantial amount of money for your deposit, then you might want to keep on going until you’ve got enough for both putting the deposit down and paying for renovations as well. For example, if you are able to live with your parents rent-free or for a very small fee and they’re willing to allow this for as long as you need, then it’s a great situation to be in – you could be able to put your deposit down and pay for the renovations up front, saving plenty of stress and worry.
#2. Pay a Smaller Deposit:
Thanks to the UK government’s ‘Help to Buy’ scheme, it’s now possible to get yourself on the property ladder for as low as a 5% deposit. The actual amount that you’ll need to save up for will vary depending on the value of the home that you are planning to buy but you will pay much less compared to a 25% or even a 10% deposit. If you’ve got enough for a larger deposit saved up but want to buy a home that needs some work, then it could be worth looking into smaller deposit options and putting the rest towards renovations instead.
#3. Get a Loan:
Now that you are a homeowner, you will be able to get secured financing from Simple Personal Loans against your home, which often comes with higher acceptance and lower interest rates. If you need to get to work with renovations as quickly as possible but have put all your savings down on the deposit for your house, then borrowing the funds could be an ideal option. Just be sure to carefully work out your budget and make sure that you can afford to responsibly make repayments each month.
#4. Borrow From Family:
If you’re lucky enough to have a family member who is willing to help you out with buying your first home, then you might want to consider asking them if they would be able to lend you money towards renovations, rather than the deposit alone. You might be able to come to an agreement with them where you can use some of their money towards the deposit and the rest for fixing up the house. However, it’s important to make sure that you’re clear on their repayment terms, as there’s always a risk that this could hurt relationships.
Buying a fixer-upper can be lots of fun, but you’ll need to be clear when it comes to affording the renovations.
