How to finance your home improvement project

June 5, 2017 | Higgins Group Real Estate

Are you thinking about doing a few remodelling projects for your home but are not quite sure how to pay for it?Home improvement projects can cost a lot of money, and most of us need to apply for a loan in order to pay for them. Like any other major financial decision, you need to take the time to take a look at the different options available.

Here are a few important things to keep in mind:

Pay with cash if possible

If you can, try to pay for the project with cash – it’s much better compared to accumulating additional debt. Obviously, this doesn’t apply to remodeling projects costing $15,000 or more. If it’s only for a small project however, saving enough money to pay for it is the best option.

You may also consider combining cash payments with other financing options, which we’ll discuss below.

0% or low interest credit cards are ideal for small projects

If you have good credit, you may be offered 0% interest deals when using your credit card. This is a great option for small projects which cost around $15,000 or less, as it’s easier to finish paying off the loan within the low interest offer’s duration (typically between 12 to 18 months).

For medium-sized projects, consider getting a personal or unsecured loan

Personal or unsecured loans are a good option for projects that require over $15,000 to $50,000. These loans aren’t difficult to apply for, and do not require any collateral. In addition, they usually offer higher loan amounts compared to credit cards.

Home-secured loans are best for larger projects

If you have equity on your home and the project you’re thinking about doing costs about $50,000, the best option is to get loans tied to your property. Look into home equity loans, home equity line of credit (or HELOC) loans, or cash refinances for the best rates. It’s also possible for you to deduct the interest on these loans to lower the interest rates on your taxes – just be sure to get in touch with a tax advisor first.

Need more home improvement tips? Take a look at this page.

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