Are you looking to do up your house? A home improvement project is not cheap. Even a minor renovation in your kitchen or bathroom can cost you thousands of Euros. You should start creating a budget several months before you actually carry out refurbishment. It is hard to come up with the exact cost of home improvement, so make sure to have a buffer to cover additional costs. Despite that, you may fall short of cash, but thankfully, you can rely on a home improvement loan with poor credit.
Some renovation projects are very minor, like giving a fresh lick of paint and doing small repair work. They will not cost you a fortune. However, there are some projects like loft conversion and kitchen remodelling that may require you to borrow money. A home improvement loan can be quite expensive as the deal you are offered depends on multiple factors, such as:
The health of your credit card
Your current financial situation
The size of money you are borrowing
The size of collateral if the borrowing sum is large
How can you find the most affordable home improvement loan?
Here are the four tips you should follow while getting a loan for home refurbishment:
Only borrow what you need
You can fill in a random figure in your application form without calculating how much exactly you need. Do not forget that you will have to pay interest on top of what you borrow, so the actual cost is much higher than you incur on the renovation of your house. The cost will be affected based on the repayment term you choose as well. A longer repayment term will cost you more interest payments.
You should carefully determine how much the renovation will cost you. Get a quote from a contractor.
Use an online loan calculator to determine the estimated cost.
Check if your budget has room for paying monthly instalments. Bear in mind that the actual instalment size will be bigger.
You should get a quote from a lender to understand how much a particular sum of money will quote you.
Look for affordable interest rates
Interest rates vary by lender. You should always research the market to choose the lowest possible interest rates. Get quotes from multiple lenders and then compare them. There are various comparison websites that give you an idea of the interest rates charged by lenders.
APRs are what you should look at when comparing deals. They involve interest rates and associated fees. Ask your lenders about fees they charge, as they do not prefer to disclose it at a screening stage. You will get to know about the fee structure only when you receive a loan agreement.
Choose a shorter loan period to save money on interest. It will increase the monthly size of instalments, but you will save a lot of money in total interest. Examine carefully if your budget can easily fit those payments.
Optimise your credit score
Your credit score must be good if you want to qualify for an affordable deal. A poor credit report is an acknowledgement of missed payments and defaults in the past. Your lender will consider you a risky borrower. As a result, you will get an expensive deal. While getting a quote, your lenders do not run a hard check, so they cannot tell you the actual interest rate to be levied.
In order not to get shocked at the time of formally applying for a loan, you should improve your credit report. Here is how you can do up your credit file:
You should check your credit report to see if there are any inaccuracies. Dispute errors.
Pay off all your bills on time.
Keep your credit utilisation ratio less than 30%.
Keep your debt-to-income ratio up to 25%.
Make sure you are not the victim of identity theft.
Keep your contact details accurate and updated in your credit file.
You should avoid having any outstanding loan at the time of borrowing money for the remodelling of your house. It will increase your chances of borrowing money at affordable interest rates.
Put down collateral
When you need a paltry sum, you can easily qualify for fast loans Ireland regardless of your credit rating. But for a larger sum, your lender may ask you to put down collateral. It depends on a lender’s policy to what extent they can lend you without security. Collateral minimises the lending risk, and therefore, you have a chance to be offered lower interest rates.
The final comment
A home improvement loan can help fund larger renovations, but they are expensive. You should try to put down collateral, optimise your credit score, look for affordable interest rates, and not borrow more than you need.
Description: You can get an affordable home improvement loan by keeping your credit report in good condition, putting down collateral, and borrowing as per your need.
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