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Home Improvements: How to Plan Your Finances

Improving your home can be a costly job, and yet sometimes it just has to be done. The cost of home improvements varies, of course, depending on what you want to change, but the one thing to assume is that the work done to your property won’t be cheap. Whether you’re eyeing up a new kitchen, planning an extension, or intending to turn your attic into a charming playroom for the children, major projects come at a price.

Due to this, it’s incredibly important that you consider your finances before embarking on improvements. There are a number of things to consider: how much it will cost; how much you’ll require as an emergency fund; and, perhaps most importantly, where the money to finance renovations or home improvements is going to come from.

Here are a few things to consider before you start:

The Time and Cost of the Project

 Before you begin, think very carefully about what exactly needs doing to your home. When you know, do your research to find two or three contractors who come highly recommended. Have them talk you through what they would need to do, and ask for quotes and a rough time scale. Once you have them, only then can you evaluate what the true cost of your project is likely to be.

 The Cost of Preparations

 Once you know what needs to be done, consider the technicalities. Some home improvements will require planning permission, for example. Make sure that you know whether your renovations will be included in this category. If they are, take the time to do your research and work out how much it will cost you and how long it will take to gain the permission you need.

Add in, too, the cost of any raw materials that you will need to provide once you have the go ahead.

 How Much You’ll Need as an Emergency Fund

 Home improvements are not cheap, and it is not unheard of for complications to arise and increase the overall cost of a project quite substantially. Due to this possibility, it could be a good idea to not only ensure that your estimated costs are available to you, but also a minimum of 20 per cent of the total value on top of this. This means that should you discover your whole property needs rewiring, you have money in the bank to cover it without derailing your whole project.

 How You’ll Finance the Project

 Once you know how much improvements will cost, and how much you’ll need as an emergency fund, you need to consider how you’ll get hold of the money.

Your own money is always the best place to start, for the simple reason that you won’t owe interest on it. Do you have savings that can cover the cost and that you’re willing to spend? If not, can the project be put on hold until you’ve saved enough money to finance it out of your own pocket?

If these are not options that are available to you, consider the borrowing avenues open to you and whether you would feel comfortable taking advantage of them. Credit cards, overdraft facilities, personal loans and specially formulated home improvement loans from companies like Nemo could all provide you with the funds you need.  Take the time to do your research and consider whether any of these would be viable options for you. Make sure you are aware of the type of loan you are taking out, as companies like Nemo secure their loans against your home, so it is crucial that you can afford to meet the monthly repayments, otherwise you may risk repossession.

Once you’ve taken care of the financial side of things, it’s on to the fun part: planning your new and improved home!