Looking to remodel your home? Thinking of flipping a house? Here are five common ways to finance a home remodel without breaking the bank!
Some people buy a home not because it’s in pristine condition but because it meets their standards, and there are many great things that can be done to personalize and improve its value. Whether it’s a complete home remodel or a simple facelift, the truth is it can cost you money. Perhaps a lot of money. However, with a well-laid-out plan, you can complete your home remodelling without financial hitches and on schedule.
Let’s look at 5 practical ways to finance a home remodel.
Save up Money
The first and most obvious of the ways to finance a home remodel is by saving up the money. In fact, saving up some cash is by far the best way to finance your home renovation project, especially if the project is small. This is because, unlike loans or credit cards, there are no interest rates or fees involved. Eliminating these extra costs keeps you within your set budget and helps avoid unnecessary hassles.
When saving up for remodeling, you’ll need to practice patience and financial discipline to hit your goal faster. One of the most economical ways to save your money is with a reserve fund.
Supplement Your Income
Another way to finance a home remodel is to supplement your current income to help you save moer quicker. Think of ways you could boost your income, like taking on more hours at your current job or taking part-time gigs. If you have specialized skills, you can be a freelance copywriter/content writer, editor, transcriber, or translator. You can also design websites, tutor academic subjects, offer consultancy services, or take casual jobs such as cleaning houses, babysitting, grocery delivery, taking on a bartending shift, and more.
Get a Loan
If you’ve saved, picked up side gigs, and you’re still not coming anywhere close to your saving target, or have more than one home renovation project and are not sure of the total costs, it may be time to consider another option –getting a loan from a bank or lender.
A personal loan is another of the most common ways to finance a home remodel. There are two main types of personal loans–unsecured and secured. Unsecured loans are ideal for small renovation projects as they don’t require collateral and often have higher interest rates.
On the flip side, a secured loan is ideal for huge remodeling projects costing a lot of money. This type of loan is backed by collateral, such as your home or vehicle, and usually has lower interest rates.
Another option could be a loan over a short time but only if you have the funds to cover it in a short time as the interest rates on these can get pretty high if you don’t pay it off quickly. If you have bad credit it might be harder to obtain credit but there are some bad credit loan providers who might be able to help.
Other different types of loans you can tap into include:
- Home equity loan
- Home equity line of credit
- Cash-out refinance
- Equity release
Home improvement loans are a great option because they’ll give you the funds you need at a lower interest.
Put It on Your Credit Card
If taking a loan for your home remodeling is not an option, a credit card is yet another way to finance a home remodel. Applying for a credit card is easy and fast, and your lender may offer you incentives like preferential introductory rates. Besides, paying for your home renovation using a credit card can significantly improve your credit score.
One major drawback of credit cards is high-interest rates. According to an April 2021 report, the average interest rate for credit cards stands at 16.15%. Also, late payments can attract late fees and an annual percentage rate (APR), which can accumulate up to 30%.
Refinance Your Next Home Remodel
Last, but not least, when looking for ways to finance a home remodel, you could always refinance your mortgage. That means taking a new loan to pay off your original mortgage loan. It’s better than a personal loan or a credit card as you stand to benefit from lower interest rates. Also, your monthly payments could be more affordable since they’re spread out over a period of time.
Final Thoughts on Ways to Finance a Home Remodel
Before starting any home renovation project, it’s imperative to think about your finances and how the project will impact your total budget. This will save you from being stuck in the middle of your renovation project. You also need to find the most sensible financing option based on personal preferences and different financial factors that apply to you. Hopefully, the above suggestions on ways to finance a home remodel can help you make your dream of turning your house into a home come true!