Filed under: Borrowing
Home improvement loans are a definite no go area. I think that home improvement loans are a false economy for the following reason.
Most home improvement loans are borrowed money, usually that either increase your mortgage balance or run along side it for the entire duration of the loan. Now then, lets do the sums, supposing for argument sake that you borrow ten thousand pounds.
This in theory adds, say twelve thousand pounds(£12000) to your home. Now that great if your going to sell up and move on to something bigger and better, but what if you don’t.
You will be paying a massive amount of interest on the initial borrowing, which will far outway your accumulation. Paying ten grand for twenty five years at even five percent interest is a massive amount.
Don’t do it unless you can afford to pay it back early, paying for a new kitchen for twenty years when It may only have an expected life span of 5 years is a mis-noma. Necessity should be giving in online saving as this will be the foundation of saving for a home upgrade.
February 15, 2010
Home improvement loans do tend to have many advantages and disadvantages. Of course it really depends on what you plan to use the loan on in order to assess whether they are a good way of adding value to your home.
Home improvement television programmes often show how a new kitchen or bathroom can increase the value of a home almost instantly. Home extensions such as adding a conservatory or extra bedrooms can often add a lot of value to a home. They are a particularly good measure if you are planning to sell your home and want to improve its value prior to selling it. If you do you research well and look at similar properties which have had the same work done, this will give you a great indication of whether it is worth taking out a home loan to do the work.
One disadvantage could be that the home loan taken out is a larger amount than is added to the value of your home. This would mean that you are paying interest on money which you may not necessarily make back when selling your home.
Of course taking out a home loan to improve your home, even if you plan not to move is a great idea! It often is cheaper than moving home and means that you can add on extra rooms that you may want from a new home. You do of course have to take into consideration the cost of the loan and whether the benefits out way the risks of borrowing money.
Since the economic downturn however, people are finding it more difficult to get these kinds of loans, as banks are far more hesitant to lend. Although there are many reports coming out that things are looking up, it’s never advisable to get a loan in economic uncertainty – especially in a time when house prices are temperamental so if you are thinking of improving your home to increase it’s sale value, it could end up being a big mistake.
June 30, 2009
Student loans are a necessity for almost all students. And while starting your working life with a large debt is hardly ideal, student loans are one of the best types of loan available.
The APR of a student loan is the same as the rate of inflation. So effectively, the size of your debt never increases. If your debt at the end of your time as a student will buy you a small car, then after 10 years, although the amount of money may have increased it will still buy you a small car, as the price of the car will have increased at the same rate.
No other bank loan will have such a low APR, because the student loans company does not make a profit while all other loan providers must.
A student loan is the wisest debt to have if you must have one. After you graduate, it’s up to you to make sure you get the help and advice you need to get out of debt.
May 6, 2008
Get help with debt. It is so easy to get into debt, but not as easy to get out of it.
The first thing you need to do to get debt free is set a realistic household budget. List all things you have to spend money on i.e Gas – Electric, mortgage, then list all the things you want to spend money on. The goal is to separate between ‘Need’ and ‘Want’ for example you ‘need’ to eat or you ‘want’ that new cd.
The idea is to look at you outgoings and see where you can make cut backs, set yourself a shopping budget for food. Some examples of how to save money on groceries, household bills.
1. Ask your supermarket what time they mark down there products, and purchase these when they are cheaper. Most things can be frozen to restore the sell by date.
2. Grow your own vegetables and fruit alot cheaper than buying.
3. Use price comparisions sites to check you are not paying to much for your gas – electric or mortgage.
4. Check with your enegry supplier to see if you have an economy setting, do you washing etc in the evening as it is cheaper.
5. Take a shower instead of a bath, its cheaper.
6. Do you really need the heating on ? Can you just put on another layer of clothing.
7. Hang clothes to dry on a rainy day indoors over the bath or use a clothes airer, its cheaper than the tumble dryer or radiators.
8. Use natural products for cleaning its cheaper and better for your health !! I.e Vinegar for cleaning windows.
Overall just think about ways to do things on the cheap, research and you will be saving money and getting out of debt.
Remember pennies make pounds and pounds make rich men !!!
April 17, 2008
So you have a household budget that you stick to but you’re still worried about falling into debt? Well that is understandable, all it takes is for the boiler to pack in, or unforeseen circumstances to pop up causing necessary expenditure of cash you don’t have.
The first way to buffer against this is to save regularly and have a savings pot for when things go wrong. At least part of the saving should be instant access for when money is needed urgently, as I found out when my cooker died! Being debt free doesn’t have to mean no credit cards.
Many credit card offer a percentage cash back for using them and as long as the balance is paid off in full every money this will save you money rather than charging you interest.
Don’t forget those insurances you pay every month either, if you drop the iron on the carpet (as i did in december) then you can probably claim it off the house insurance if you have accidental cover.
March 23, 2008
1. Never let your expenditure exceed your income. Use a budget to work out how much you can afford to spend on the various costs of living and stick to it!
2. Write down everything you spend. It’s surprising how much money you can waste on non essentials and not even remember where it went.
3. Unless you are possessed of sufficient discipline to use a credit card sensibly, it’s better to stick to cash. If your weekly budget for shopping is £60, for example, then take £60 in cash with you and leave the debit and credit cards at home. That way you can’t over spend. This is also a useful tactic on nights when beer can impair financial judgement!
4. Be leary of credit. If you can’t afford it now, odds are you won’t be able to afford it later. If you must use credit, check the APR, repayment period and possible penalties for late or missed payments.
5. Don’t carry money or credit cards “just in case”. That way you won’t spend on autopilot.
6. Never buy new when second-hand will do. Besides being better for the environment, buying second-hand is better for the purse.
7. Be a saver! Save up for planned purchases and treats. Shop around for good interest rates on savings accounts and watch the pounds mount up. It doesn’t matter if it’s only a small amount saved each month. It will add up.
8. The supermarket is not your friend! Supermarkets market their goods with great care and skill to seduce you into thinking you’ve got a bargain. If you didn’t need it in the first place, then it’s not a bargain. Write a list and stick to it.
9. Buy only what you need. Particularly for smaller families, buying large amounts of goods because they work out cheaper can be counter productive. Many products have limited shelf life and will end up going off and being wasted before they are consumed.
10. Enjoy your cash! Being free of debt and the “feel good” factor of some savings frees you up to really enjoy what you’ve purchased, rather than worrying about the debt which it has entailed. Go out and enjoy the debt free world.
March 1, 2008
