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The Rise In Home Improvement Loan
Reasons for the Increase in Home Improvement Loans
There is no doubt that if you look back over the past 10 years you will find there has been a substantial rise in the number of home improvement loans. The main reason why this has occurred is to make better use of financial resources.
If people want to improve their living conditions by purchasing another home it usually means selling up and purchasing another home where they will incur a substantial sum in stamp duty. The amount of stamp duty they could be faced with in purchasing their new home is usually well above $25,000. This money can, instead, be applied towards the cost of renovating their existing home and added to their home improvement loan.
In many cases people want to stay in the general neighbourhood where they currently live, but to purchase a home that has all the features they desire and pay stamp duty on top of that is beyond their means. By seeking a home improvement loan they can add the improvements they want and stay in the same area, continuing to enjoy all the advantages of their current neighbourhood.
How Do You Obtain A Home Improvement Loan?
The lending industry offers many different types of loan products but does not have a specific product known as a home improvement loan. If you require funds to enable you to carry out home improvements you can obtain the funds by several different means. For example, if you have a redraw facility on your home loan that is adequate for your needs, then you could use this as your home improvement loan. Alternatively, you could go back to your mortgage lender and ask them to raise the amount of your existing loan to cover your home improvements. If you have occupied the property for several years it has probably gone up in value so there is some untouched equity you could draw on. In this case the extra funds could become your home improvement loan. However, if your bank is unwilling to accommodate your requirements you may need to refinance with another lending institution. A mortgage broker would be able to assist you with this. On the other hand, if you wish to carry out only minor home improvements you might find a cash loan more suited to your requirements.
The Mortgage Broker's Role in Getting Your Home Improvement Loan
Did you know that mortgage brokers are engaged to act on your behalf? They act independently of the mortgage lenders, being self employed or engaged by a broking company. However, the term 'mortgage broker' can be confusing because the banks sometimes refer to their loan officers as mortgage brokers. In this case the broker does not work independently and they are not working for you but for the bank.
The task of mortgage brokers is to source the best loan for you from the various mortgage lenders on their books. They often advertise the fact that they use up to 30 or 50 lenders and so you can be sure they will find the very best deal for you amongst all these mortgage lenders. However, the reality is that most work very closely with just a few lenders. Usually this is because the terms offered by these mortgage lenders are very good and the broker has developed a good working relationship with them.
Apart from being obliged to work on your behalf and source a loan with good terms for you there are other advantages in using mortgage brokers. They will guide you through the process as it can be quite daunting. They will assist you in filling out the many forms and they do not charge you for their services because they are paid by the mortgage companies.
Cash Loans – Are they Good for Home Improvements?
In most cases cash loans are those where you borrow funds without providing any security. Usually we refer to cash loans as personal loans. The sum that you can borrow on cash loans is considerably less than for loans where you provide the lender with security. Generally the amount you can borrow on cash loans is limited to somewhere around $25,000 to $30,000. These loans are often used for debt consolidation but can be used for other purposes, such as home improvements.
