Secured Loan Improvement Plans
After the initial few years after a home has been built, home owners may decide to update their home with landscaping, new kitchens and flooring etc.. They may be already repaying a mortgage and therefore may find it difficult to commit to more debt from sources that charge high interest rates such as credit cards and non secured loans. Home improvement loans that are also secured in the same manner as their mortgage can come in handy in such cases. These loans are secured with the remaining equity in their homes and the home owner is charged a lower amount of interest as a result.
Buying a New Home
When you first move into a home there are a lot of expenses to look after. There are all of the moving expenses and then usually there are decorating expenses such as new blinds, appliances and new furniture. If it is a brand new home, you may want to add a fence around your property and complete some landscaping to improve the curb appeal of your home. In some cases consumers will add a pool in the backyard and a pool shed to house the pump along with the chemicals etc. Inside you may want to finish the family room in the basement if this was not already provided by the builder. All of these renovations and improvements take a lot of money and most of us need to consider a small loan to cover these improvements.
Buying a Home that has been Lived In Previously
If you move into a home that has been lived in before, some home owners will even replace the old flooring before they move in and paint as well. Depending on how old the home is, there can be a lot of things that need to be either upgraded or replaced. Everything from the furnace, the AC, the windows and the flooring may need to be changed. These expenses add up in a hurry and sometimes you cannot even plan for them. The home owner may need to consider an improvement loan to initially pay for these items and then focus on repaying any loan that might have taken out to pay for these things.
Ongoing Home Maintenance
Unfortunately the longer you live in a home the higher the chance that large maintenance items will be required such as furnace replacement, a new roof or maybe a new driveway. In addition now that you have the initial renovation loan paid off, it is time to start thinking about updating the windows to save energy and to landscape the front and backyard.
Some of these items are discretionary in that you can plan for them and save sufficient money to pay for the items from your savings. In many cases, one day you wake up and find that there is no heat in the house for example. The furnace has quit and it is too expensive to repair it so you might as well buy a new high efficient model that will save energy use, but cost a great deal to get started.
All of these things cost a lot of money. Most home owners do not have this kind of money just lying around waiting to be spent. There are just too many other places for your dollars to go to and many home owners will apply for a secured loan for their improvement plans or in this case emergency repairs. In a situation like this one, there is no choice. You have to get a new furnace or live in a cold house! A loan is the answer in this case.
Why Consider a Secured Loan?
A secured loan will carry a lower interest rate since it is secured against the equity in the home that you live in. Of course you must have sufficient free equity in the home. In other words the value of the home, less the value of the mortgage must be sufficient to cover the value of the secured loan that you are considering.
The loan can be for any length of time depending on the lender and the amount. Some lenders limit the term to 5 years while other lenders will consider longer terms. A longer term will cost more in total interest paid, but they will have lower monthly payments. If you are having trouble with cash flow a lower monthly payment may be the answer in a situation like this. If you do come into some cash in the future most mortgages and loans have the option to allow extra payments several times a year which can decrease the total amount owed and decrease the total interest you will pay over the life of the loan.
The nice thing about a secured loan is that you can repay the secured loan any time in addition to the regular monthly payments. Some clients will take a 5 year personal secured loan and then repay the loan when they receive a bonus from work or come into extra cash which allows them to repay the loan. They can discharge the loan in much less time than the original 5 year term, saving them interest and freeing up monthly cash flow to be used for other purposes.
They do not have to wait until they have the money to update their homes. They can proceed whenever they wish with their upgrades and renovations, paying off the loan at their convenience
In case you are wondering how much some of these upgrades cost and why you might need a loan, we decided to list a few ranges for some of these things. For example, a new roof can cost anywhere from $2000 to $10,000 or more, a new furnace could be $3000 to $7000 and so on. Landscaping can be any large number depending on the property and the improvement plans. These are pretty large numbers and most people just do not have that kind of cash sitting around.
Using a secured loan for your improvement plan is the best approach for many people. Take the time to comparison shop to find the best rates and terms. If you do not have the time to compare rates and terms, consider using a broker to help you get the best deal on your loan. They get paid a finder’s fee for bring qualified borrowers to lenders so there is no extra cost for the consumer. Compare you banks proposed loan interest rate and term with that provided by the broker and select the loan that makes the best sense for your personal situation.