One of the pitfalls of being a homeowner is having to pay for home repairs yourself. These repairs can be quite expensive and you may not always get much warning. Below are just some of the ways in which you can cover the cost of home repairs.
Are you insured or covered by a warranty?
If your home is damaged by a natural disaster, fire or burglary, it is possible that you may be covered by home insurance. This could help to greatly reduce home repair costs – a good home insurance policy should be able to pay the bulk of repairs for you.
Getting insurers to pay out isn’t always easy. In most cases, you will have to notify insurers of damage within a few days and you’ll need to take photographic evidence. You must not make any repairs before making a claim, as your claim may then be void. That said, it could be worth getting a quote. In some cases, it could be worth hiring a specialist company to help you make a claim – companies like Public Adjusters exist to help insured homeowners get the payment they deserve. If anything, it could reduce the stress of making a claim.
When it comes to broken furniture or appliances, you should check whether these items are covered by a warranty. This is particularly the case with home features that are newly installed – a new boiler will usually come with at least a 2 year warranty. If you had a roof or windows recently installed that are now damaged, this too may be covered by warranty. This could enable you to seek out free repairs, depending on the terms and conditions of the warranty.
Do you have an emergency fund?
An emergency fund is a savings account used for paying for emergency costs. This could include expenses such as home repairs, car repairs, medical bills or vet bills.
If you don’t have an emergency fund, now could be a good time to start one. You should aim to contribute money each month until you have at least $1000 in there. Whenever you dip into your emergency fund, start putting money back in there to top it back up. Alternatively, you could just keep putting money in each month.
Can you take out a payment plan?
You may be able to cover the cost of home repairs by taking out a payment plan. Certain repair services may offer the option to pay for repairs in installments over several months. Such plans often don’t have any interest providing that you pay them on time, making them a better alternative to a loan.
It’s worth shopping around for local services that offer this option. It will mainly be larger companies that are able to offer payment plans – smaller companies are unlikely to be able to provide this.
Should you take out a loan?
Borrowing money is the least preferable option, but there may be times when it’s the only option. Very expensive major repairs will often need to be funded with a loan. There are several types of loan that you can consider.
The first option is to take out a personal loan for home improvements (sometimes called a home improvement loan) from a bank or a private lender. Your ability to take out such a loan will usually be based on your credit score. Interest rates can be high for such loans if you don’t have a good credit score so be wary.
Another option could be to refinance your mortgage. This involves approaching another mortgage lender and taking out a new mortgage to pay off your existing one while also paying off the cost of repairs. Refinancing a mortgage could be worthwhile if your current mortgage rates are unfavorable, allowing you to shop around for lower monthly payments or lower interest. You may however have to pay an early exit charge on your existing mortgage, which is worth weighing up.
Instead of taking out a new mortgage, you may be able to borrow from your existing lender and simply extend your existing mortgage. This could be a good option if your current mortgage rates are favorable or if the exit charge is too high. Extending your mortgage may not require a good credit score as you can simply use your home as collateral.
For cheaper repairs, you may just be able to pay by credit card. This could prevent you taking out a new loan or adding to your existing mortgage. In most cases, you should avoid maxing out a credit card just to pay for repairs.
