Construction materials and contractor services are expensive, so a large sum is often needed for repairs. You can save it for a long time or take a cash loan. We tell you in which situations you can get by with your own funds, and when it is worth resorting to lending.
Save or take out a loan
Each method has its advantages and disadvantages. Let's present the pros and cons in the form of a table.
While you are saving, building materials and services become more expensive, and in the end there is a risk of paying more than the interest on the loan.
You can save money at your own pace, rather than being tied to a monthly payment.
You have to live for a long time in the list of mobile number database uncomfortable conditions of an unrenovated house
You immediately receive the required amount and save on inflation
Interest must be paid for using borrowed funds
You improve your living conditions, rather than waiting for funds to become available.
A large monthly payment can be a serious burden on a family budget.
Calculate how much money you need for repairs. Then use a loan calculator to calculate an approximate monthly payment. If the payment is more than you can put aside each month at the maximum loan term, it is worth saving up first and then taking a smaller amount that you can actually pay.
If you can put aside more than the monthly payment, you can safely take out a loan. You will buy all the materials now, while they have not yet become more expensive. And the funds that you planned to save can be used for partial early repayment with a reduction in the loan term. This way, you will pay less interest.
How to choose the type of loan
There are two main ways to renovate a home with a loan:
consumer cash loan;
credit card.
Classic consumer lending is the receipt of a certain amount at interest. You can spend cash for any purpose and return it monthly in pre-determined amounts. These amounts are specified in the payment schedule. Interest is accrued from the first day.
A credit card is a payment instrument with a set limit and an interest-free (grace) period, which averages 55 days. If you make purchases and return funds to the card before the end of the grace period, you do not pay interest to the bank. But if you go beyond the grace period, interest is charged on the entire amount of the debt. Credit card rates are, on average, significantly higher than consumer loans.
You shouldn't withdraw cash from such a card - most often this service is provided for a commission. In addition, cash withdrawals and transfers may lead to an early end of the grace period. It is also not recommended to pay for expensive purchases that you will not be able to compensate for within 55 days. But you can use it for small expenses - for example, to buy some building materials.