Bor­row­ing to ren­o­vate your home

The Telegram (St. John’s) - Home Buyers' Guide - - METRO REGION -

Is your home look­ing a lit­tle run down? Get­ting tired of that old kitchen or think­ing of knock­ing down a wall for more space? Home ren­o­va­tions can in­crease the value of your home (de­pend­ing on what you are chang­ing or adding), but they can also end up cost­ing a lot too.

If you don’t have ex­tra cash sit­ting around, you may end up bor­row­ing against your home to help pay for the work, us­ing a line of credit or a per­sonal loan. This means the col­lat­eral you use to se­cure the loan (like your home) is at risk if you don’t pay back the money. This route could cost you more than you bar­gained for.

Con­sider the fol­low­ing BE­FORE in­vest­ing in your home ren­o­va­tions with bor­rowed money:

• Bor­row only what you can af­ford to pay back.

• Mon­i­tor in­ter­est rates and in­fla­tion – small dif­fer­ences in rates can have a big im­pact.

• Know the con­se­quences of us­ing col­lat­eral as se­cu­rity for your loan.

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