21 Jun How to Finance a Home Renovation
Our home is typically our biggest asset, and once we purchase a home, we find ourselves in the position of maintaining and growing that asset. As a result are often considering home improvements, renovations or system upgrades, within our home.
Sometimes these home expenditures come to us as a bit of a surprise when an appliance suddenly breaks down and we have to deal with an immediate unexpected cost, but most often we plan for these expenses.
From time to time inspiration strikes and we decide that it’s time change the aesthetics of our home, or perhaps we just decided that it was time to enjoy more functionality for our family’s needs. There are many reasons why a homeowner may wish to improve the look and feel of their home, and each reason is just as valid as the next.
Ways to Finance Your Home Renovation
No matter the reason for your desire to consider some home improvement options, you’ll need money or financing to undertake any project. Even small projects require cash that may not be readily available to us at the time.
Your money and/or financing will need to be in place before you start having Contractors commence work and your building supply store will require all materials to be paid for prior to shipping. Having the right financing options at your disposal prior to undertaking your project will make the renovation process far more organized and seamless than trying to “pay as you go”.
Several financing options exist for homeowners to choose from, each bringing many advantages and perhaps even some disadvantages to consider. Whether it is time for a new roof or your HVAC system needs updating, or you’re ready to replace the floors and cabinets in the kitchen, review the best financing options and get the money that you need to get things done. A little bit of research is all that it takes to find financing options that make renovating your home a simple process.
Personal loans are available from banks and other financial institutions, providing cash that can cover the expense of your renovation. Many different types of personal loans exist, each offering their own advantages and disadvantages. Review each type of loan to determine if it is a good option for your needs.
Some of the loans require upfront collateral to qualify, others require nothing more than a signature. Review your loan options to find the best companies and interest rates for your specific financial situation.
Home Equity Loan
A home equity loan is a special line of credit taken against the equity in your home. The loan is designed to help homeowners make necessary renovations to their property. If you are completing a larger renovation project, this may provide the financing that you need.
Compared to other financing options, the home equity line of credit offers larger amounts of money to use for your renovation needs. The interest rates on the home equity loan are usually lower than some of the other financing options, although depleting the equity in your home has several disadvantages to consider.
If you carry a credit card, this is one time that you might consider swiping it for your purchase. The money is available to you quickly but can give a false sense of financial security. The downside is that you must repay all charges each month or face increasing interest rates, the rate which is typically higher than other forms of credit.
Pay off credit card charges quickly to avoid mounting interest rates that can triple the amount of money that you owe from the amount originally charged on the card. Use a low-interest credit card if you choose this option for your home renovation financing.
Contractor Company Financing
A growing number of home improvement contractors offer in-house financing to qualified applications. Financing options are usually offered by larger companies. If your credit score is up-to-par, but the bank is not open to financing your project, then it may be wise to look at the contractor company financing options that are available.
Often, these providers work with many areas of small financing companies, increasing the odds that you will find a lender that will meet your expectations. If you do not have good credit, this may be a better option than bank financing, but be prepared to experience higher interest rates with a higher risk lender.
Borrow the Cash From Friends & Family
The idea of borrowing money from friends and/or family is an instant turn-off for some people, but it might be worth considering when the need for renovations around your home arises. If there are members of your family or close circle of friends who have access to the cash and can lend it to you, why not ask? Many families have developed good wealth through a practice of lending from within the family structure.
You can come to an agreement for a loan from this person or persons and use the money where it is needed for your renovations. Make sure that you repay the money you borrow as promised so you do not cause any turmoil between people closest in your life.
Rebates and Other Offers
In addition to the financing options above, special rebate and incentive offers may also be available for homeowners who are renovating their properties. Purchasing certain products labelled with the Energy Star label may provide nice rebate options. You’ll need to learn more about the appliances that qualify and the steps required to take advantage of the rebate.
Appliance manufacturers oftentimes offer incentives and rebates for homeowners. Also for those who use environmentally, ‘green’ renovation options, they may also qualify for rebates and special discounts. The Healthy Homes renovation credit is one of the many available to homeowners throughout Canada.
Interested applicants must complete an application directly with the program, following all of the requirements to qualify.
Financing Home Renovation Projects
Don’t assume that renovating your home is out of the question due to inadequate funding. As it is clear to see from the information above, there are many options for financing a renovation project you have in mind. Even with credit issues standing in the way, there are several ways to finance your renovation project.
Check out each of the financing options to learn more and discover which is best suited for your needs. When you’ve secured financing and want to start your project, call Plumbing Mart for your free estimate to get things started. And remember, a quality renovation will always pay for itself with improving home equity and of course your family’s enjoyment.