Property extensions are generally the best way to add value to your home. If you can design an extension that gives you extra living space and adds bedrooms, you can increase your property value by tens of thousands of pounds.
Investing in your home is much more profitable than putting money in a savings account. Stocks and shares come with a lot of risks, but there is nothing as safe as houses.
Here are five innovative ways to finance your property extension, so you can get more money for your home when the time comes to sell up and move on.
Release the equity in your home
If you have owned your own home for a while and made regular mortgage payments, and are aged 55 or older, you may have built up equity in your property. Equity could be released, if you are successful in your application, to make home improvements. Using equity to invest in home renovations could be useful to you. You can speak to an independent equity release advisor to discuss your options and find out what’s available to you.
Releasing equity is an advised process that can take some time depending on your circumstances, and your mortgage advisor can let you know how long it will take for the money to arrive. You will also need to work with a specialised equity release solicitor. Depending on how long you have had your mortgage, and how many payments you have made, you could have equity locked in your property value.
Retirement Solutions has a handy guide to help you find out more if you are wondering how much equity can I release. You may be able to receive the tax-free cash in a lump sum. Alternatively, you could release the equity in amounts over time, otherwise known as a drawdown.
Use loans and credit cards
If you are willing to pay some interest on the costs of your home extension, personal loans and credit cards can be a great way to build up your budget quickly and start work right away. With careful planning, you can manage the costs and make your payments while you complete your property extension. The value an extension adds to your home will cover the added costs of interest.
Look for low-rate loans and cards to help keep costs down. Balance transfer offers on credit cards can help you a lot too. Many credit card companies offer deals that allow you to transfer your existing credit card to them at a greatly reduced rate of interest. You can make your spending on one card, and move the debt to another, drastically reducing your costs.
Personal loans are a good way to manage the expense of a property extension too. The rates are set for the term of the loan, and so are the payments. With a loan, you can budget for the cost of the building work over a longer period of time. Though you do need to be careful when assessing how much you can borrow, and how long it will take you to pay the debt back, this method allows you to start the process of extending your property quickly.
Tap into any savings you have
Savings that you have built up over time are a great candidate for financing a home extension. Investing in your property often yields higher returns than a savings account or stock investment. Though you will have to wait until you sell your home to realise the gains, they are worth waiting for. Home extensions can give you a huge return on your investment, especially if it adds extra bedrooms.
Savings accounts will typically yield around 3% interest, and this is often just an introductory rate. Long-term savings usually only receive a 2% annual increase. Extensions to homes can give you a return on investment of up to 70%, dwarfing the interest rates available at banks and building societies.
Stocks and shares can compete, but only if you are very lucky. Investing in your home is one of the smartest investments you can make. The only catch is having to wait until you sell to get your hands on the money. You will have to sell your home to the next buyer to get the money back. This can be a great way to plan for your financial future.
See if you can remortgage
Changing your mortgage provider can help you reduce your monthly outgoings. You can use the money you save to help finance your property extension. Like a loan or a credit card, this can help you to get the funding quickly, so you can start the work right away. If you have a time constraint, such as getting a room ready for an elderly relative to move in with you, this can be the perfect solution.
Before you start the remortgaging process, make sure you have fully budgeted for your home extension and accounted for any cost overruns. With your home remortgaged and the work underway, your finances could become stressed if the extension begins to cost more than you expected.
Mortgages are essentially large loans that use your property as collateral. If you cannot keep up with your payments because of the cost of the extension work, your whole home could be at risk. Though it can be a way to finance a home extension quickly, you should explore other options first.
Side hustles can pay for extensions
Many people all across the world are spending some of their spare time earning money. This can be done in many different ways. Simply working as a gardener and landscaper at the weekend can generate a sizeable income that you can use to finance your property extension. You can also start ‘side hustling’ before you commit to any building work, allowing you to build up a nest egg before the bills for construction and materials start arriving.
Your side hustle can be small and still generate a lot of money. If you know how to get a following on social media, you can turn your Instagram and Twitter posts into a source of income. Social media influencers can make a lot of money by recommending and reviewing products. This only takes a few hours a week but can be worth a lot of money to big brands in fashion, health and beauty, and food.
Consider clearing the clutter in your home too. You may be surprised at how valuable some of it is. Old video games, books, and even DVDs can be sold online through eBay or Facebook Marketplace and generate a lot of money. You may have hundreds or even thousands of pounds stored in the attic or at the back of a cupboard. Every penny adds up and helps you realise your dream.
Any one of these innovative ideas can help you fund your home extension. Combine all four, and you will be able to fund a fantastic home extension that will add a huge amount of value to your property. Investing in your home is investing in your future. Plan your home extension and use these top tips to finance the building work. You will receive a huge return on your investment when you sell your home.