Misconception is never good for a borrower because it can affect the whole financial condition and also the borrowing decision. Among the many loan options, the home improvement and home extension loans are very popular. They are in fact, among the most sought after choices. Unfortunately, many fund seekers are confused between the two. It happens just due to the lack of knowledge and financial literacy.
Here are the points of differences that separate home improvement loans and home extension loans. Have a look, and next time when you borrow for any relatable purpose, you can make better decisions.
|Home Improvement Loans||Home Extension Loans|
|Home improvement loans are short-term financial support tools that support small and basic home repair and improvement needs.||Home extension loans provide funds to make bigger changes in a house to increase the space.|
Affordability Difference Is Considerable
Home extension loans – have bigger borrowing limits and that means you need to have a strong repaying capacity. Technically for every loan you need the same but an option you use to borrow bigger, obviously needs bigger strength.
The fund seeker needs to work harder to create a large space in the bucket of creditworthiness. But, it is never difficult to get approval on home extension loans because they are considerable in amount but not as big as a home loan.
Home improvement loans – These are also easy to borrow but due to a smaller amount they are lighter than home extension loans on the affordability part. Home extension loans are the smaller versions of the house related expenses.
They are borrowed just to improve the parts of a home that need repair or renovation. It can be due to any reason. Damage due to a storm, a weak wall due to the old age of the house, or something similar.
Do They Clash With New Borrowing Decisions?
Home extension loans demand special caution on your creditworthiness if you also have a plan to take another big loan. For example you need to extend the house to create a bigger car parking space. At the same time, you may need to apply both for the car loans in Ireland and home extension loans.
The latter one is not of a small amount and that may hamper your repaying capacity on the part of car loans. The indicates that you need to be extra conscious with personal finances while borrowing for creating more space in house.
Home improvement loans –To be precise, home improvement loans are weaker enemies to your chances of taking a new loan. They are already not big in size and in fact little in some cases depending on the size of your borrowed amount.
Home improvement loans can fit in just any kind of repaying capacity with a little space to breathe. Isn’t that amazing. Also, they generously leave space for the new debts to fit in the personal finances.
The Tenure and the Loan Amount
Home extension loans need more funds, it means, bigger is better. This is the reason the that basic loan amount in this case can be from €1000 to €30,000. The tenure can be up to 3 years. Yes, this may sound like a big amount, but this is how the extension acts on the cost part.
You know well, it is not easy to increase the space in your house. Home extension is basically the remodeling to transform the basic structure into a new one. What do you think, what can make that easy on your pocket? Only a finance option that is dedicated to serve a precise need of the borrowers for a special purpose can do that. Not every time you need a borrowing option with no purpose constraint because sometime those with a decide reason are more useful and cheaper.
Home improvement loans as you ALREADY know are little and they start with a tiny amount and end with a bit larger amount as the maximum limit. €1000 to €8,000, this is how the least and the last borrowing limit works and one can really do well with this kind of loan amount.
The minor improvement things can easily go well with this money and this is how the people manage. However, like extension loans, the tenure can be up to 3 years but normally people end with one year. This is because, if you generalise the needs, they do no spread the wings beyond 12 months.
Any Alternative to These Loans?
Home extension loans – In rare cases, people opt for credit line in place of these loans but most of the them have some weaker repay capacity issues. The extension loans are cheaper in price and their ultimate feature of customization makes the loan deals even more bearable.
Finance market is huge and offers options to all lending choices but there is no second thought on the point that some things are irreplaceable. They are launched by the finance experts in the market because they know the importance of specialized financial products that focus special needs.
Home improvements loans – Normally, these have no replacement options other than the personal loans that are much more expensive. Who wants to pay hefty instalments? Do you want that? Certainly not. With limited monthly budget it cannot be easy to plan finances with a big instalments to pay for small repair work. That does not sound rational.
The loans for home improvement are designed to fit exactly in the context they are made for. This is the reason people want them whenever they plan a refined look for their houses. You might find an alternative to extension but not normally for the improvement loans.
The above points should be sufficient to reveal the facts that prove the dissimilarity between the home improvement and the home extension loans. Your borrowing needs match better with the right kind of loan option when you know everything about the available options. Comparison between the two similar looking things is every important. Most of the borrowers, fail to choose the right option without the right knowledge.