Sorting your finances when preparing for an external renovationback to article list
Most of us know that when it comes to home renovations we need to put some thought and planning into just how to pay for it. An outdoor landscaping makeover can require just the same – particularly if your plans include big ticket items such as groundworks or construction.
Here’s some tips from the team at Harmoney to get your finances sorted before you start:
Check your credit
Unless you’re saving for the full amount of your project, it’s a good idea to check your credit score, and credit history. You’ll want them to be as good as possible before you apply for a personal loan, or any form of finance, so you can access good interest rates. If you have missed payments or defaults, now is the time to sort them out. A defaulted payment stays on your credit file for five years but will impact your credit score less if it’s been paid. If you see any errors in your file, contact the credit bureau and ask to have it reviewed.
Check your expenses
Nobody likes budgeting much but if you’re wanting to comfortably repay a loan amount, or save for a big project, you might be surprised at how easy it is to claw back some expenses without too big of an impact on your life. Are you paying for entertainment or other subscriptions you don’t use, or can manage without? What about a gym membership that’s being under-used? You don’t need to be a prisoner to your financial plan, but small changes may help you reach your goals faster. Don’t forget to build rewards and the odd treat into your budget to keep you on track and stop you from resenting your goals.
Check your visuals
Do you have a picture of your dream garden make-over? Stick it on the fridge, on your phone, in your wallet… Keeping your goal in front of you and top of mind can be a big help in keeping you on target with your finances. It’s a direct reminder of what you’re trying to achieve each time you’re tempted to spend. Re-naming your bank account “my dream backyard” or whatever is relevant to you, is another way to remind you of your end-goal.
Check the facts
Do your homework before deciding the best finance option to pay for your project. Some common options include extending your mortgage, using credit cards, or applying for a personal loan.
Researching the best option for you does require a little bit of maths homework, comparing not just interest rates, but how much total interest you will pay over the life of your loan. To make it easy on yourself try the calculators available at sorted.org.nz to compare different options.
Paying for a project by extending a mortgage appeals to a lot of people as it means they don’t give themselves an extra monthly repayment to think about. But it’s also worth working out how much extra interest you’ll pay if the loan term is much longer. If you do opt to roll your loan into your mortgage you might want to up your repayment amounts, so you pay off the additional amount faster and get the benefit of a lower rate.
Credit cards can be an option to cover your home renovations, but be mindful of higher interest rates. You may want to work out a payment plan in advance to reduce the debt as quickly as possible. Credit cards can be a useful option to cover unexpected, or emergency renovation costs while you figure out a lower cost way to cover the debt.
A personal loan is an option. You can apply for a personal loan before you start your landscaping project and this will give you a clear idea of what you can afford. They will also usually have an interest rate fixed for the loan term, meaning no unexpected interest rate increases, that alter the amount you have to repay. Some personal loan products, such as those offered by Harmoney, also have a rate-for-risk structure, which means you will be offered an interest rate and loan amount personalised to your own circumstances rather than “one size fits all”.
If you’re not sure which is the best finance option for your circumstances you might want to have a chat to an independent financial adviser.
Learn more about the costs of different types of landscaping projects in Project Estimates
Harmoney offers personal loans with interest rates tailored to your personal circumstances and no break fees. Apply online in minutes.
If you have some ideas surrounding your landscape and garden, get in touch with Zones today. We’ll book you in for a free consultation and create a design that meets your budget and ideas