It is usually the most expensive of all, but a house extension can make your home more valuable. Those who own homes that have been extended will be able to sell them at a higher price in comparison to those who haven’t had anything done to their property. This makes it important to know how to finance a home extension, and don’t worry, though – there are many ways to fund a home extension.
How much does a house extension cost?
The cost of a house extension depends on many factors, including the size and location of the extension. A home extension can be as simple as adding another room or extending an existing room, or it could be more complex, like adding a basement or attic. The average cost to add an additional room would be £15,000 – £20,000, depending on the size and location of the room. The cost of an attic addition would range anywhere from £10,000 – £25,000, depending on the size and location of your new space.
The amount of money you need to spend on your extension depends on how much work you want done, and who the contractor is. Usually, the cost of £20,000 is enough for projects like:
- Garage conversions
- Room in loft conversions
How can I finance a house extension?
We already know how much an extension might cost you, so let’s check out your options for funding the house extension.
1. Using your savings
If you have enough saved up in cash and investments, this is one way to go about it. Just make sure that your savings are enough because if they’re not, then you won’t be able to afford the loan repayments as well as the other costs associated with buying an extension (e.g., legal fees).
2. Using an unsecured personal loan
An unsecured personal loan is a loan that is offered to individuals without any collateral. Unsecured personal loans are not secured by any asset such as your home, car or other property.
In order to get an unsecured personal loan, you will need to have a good credit history. If you have any late payments on your credit report, then this could cause problems when applying for a loan. It may be necessary for you to pay off some debts before applying for an unsecured personal loan. You can borrow £20000 loans depending on your creditworthiness and affordability.
3. Remortgage your home
If you’re planning to extend your home, a remortgage can be a good way of funding the project. This is because it allows you to spread the cost over several years and lower your monthly payments.
It’s important not to rush into this decision, though, as it may not be possible for your lender to offer you a loan that matches what you want.
The key thing is to find out how much you will need before making any decisions about how much money is available from a remortgage.
4. Use a credit card
When you’re in the planning stages of your home extension, you might be tempted to go for the lowest loan amount possible. But if you’re not careful, this can leave you with a huge mortgage bill once the costs of labour and materials start adding up.
A better option is to use a credit card to get started and then take out bigger loans later, when you have more cash available. You’ll find that using a credit card makes it much easier to pay off your debts as soon as possible, which means that your interest rate will be lower than it would be on a standard home loan. Having a good credit score will make you eligible for a credit card.
5. Explore your options for a second mortgage
If your home extension costs more than your budget can handle, you will need to explore your options for a second mortgage.
With a second mortgage, you can borrow money against the equity in your home. In this way, you can take on all or part of the cost of your extension, as long as it fits within the terms of the loan agreement.
Before applying for any kind of the second mortgage, make sure that it’s suitable for you and your family’s needs. Compare different lenders’ offers so you can get the best deal for yourself and your family.
Extensions are a great way to improve your existing home and add value. However, with the right planning and having a plan B in place there is no reason why you cannot extend your home. We hope that these finance options will help you with getting started.
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