4 Creative Ways to Fund Your Home Renovation

Home renovations always cost more money than expected, not to mention how time-consuming they tend to be. From deciding on your needs and creating a design project to finding high-quality materials and reliable contractors, the timeline of your home remodel will only grow, along with the funds needed to bring this project to life.

Looking into additional ways to fund your home renovation instead of contriving to pull it off with your personal savings might be helpful. This article features several creative ways to fund your home renovation without sacrificing the quality of materials or workmanship. Apart from refinancing your mortgage and taking a personal loan, you can explore options like Home Equity Line of Credit (HELOC) or a home equity loan, as well as look for extra sources of income.

Continue reading to learn more about the available alternatives and choose what’ll work best for you to create the house of your dreams.

Take a Personal Loan

Personal loans are available from different banks and credit unions and can be used to pay for various expenses, including home renovations. To get a personal loan, you just need to be at least 18 years old, have a job and a steady source of income and have a good credit score. You can apply for a personal loan regardless if you’re refinancing your mortgage or not.

The loan terms often range from 1 to 10 years, with an annual percentage rate (APR) ranging from 6.34% to 35.89%. The longer the term, the lower your monthly payments will be. But, your interest rate will grow higher.

If you’re planning to use a personal loan to fund your home renovation, go through your budget and figure out how much money you need. If possible, you should only take out as much as what you really need, and don’t borrow more than you could repay.

Alternatively, if you’re planning to renovate an inherited property that’s going through the probate process at the moment, you can consider applying for an inheritance loan. Doing this will allow you to collect part of the money from your inheritance fast, which may be helpful in your situation.

Borrow Against Your Home Equity

You can leverage your home’s value to pay for specific renovation projects or meet your personal needs. You can take out a loan against the equity in your home, and use the money for other expenses like college tuition for your child, mortgage payments, home improvements and repairs, travel, or paying off debt.

As long as you have sufficient home equity, you can take a home equity loan or line of credit. A HELOC typically has a variable interest rate, while a home equity loan is fixed-rate. The former is frequently used to pay for a significant expense that you can’t cover by refinancing your mortgage or taking a personal loan.

Refinance Your Mortgage

Refinancing your mortgage can be done by applying for a new mortgage with a different lender or through your current lender. It allows you to consolidate all your debts into a single monthly payment, potentially lowering your monthly payments and interest rate. It also enables you to sell your current home and buy a new one. However, refinancing comes with closing costs such as appraisal fees and an attorney fee (if you’re working with one). These costs are typically deducted from your proceeds.

Refinancing your mortgage won’t necessarily have any immediate financial impact on you, but it will make it easier to pay off large amounts of debt over time. The faster you pay off these debts, the more money you save on interest charges.

Get a Second Job

If you want to fund your home renovation and pay off other debts, you can get a second job to earn extra money. Working overtime or taking on another job is not as easy as it seems, but it’s definitely still possible if you’re determined to work hard and make it happen.

Depending on your current job, you can ask for more hours or even apply for an additional job. You could take on a part-time job, freelance, or pick up extra shifts at your current job. If you have a lot of free time outside of your regular job, there are plenty of other ways to generate some income. For example, you could start a small business, consider freelancing, or start selling things on eBay or Amazon.

Final Thoughts

When it comes to funding your home renovation, there are a few things you need to remember. First, you should start by creating a realistic budget and make sure to include all the necessary costs. Second, you need to find ways to reduce your overall costs. And lastly, you should consider exploring different financing options to fund your home renovation.

As for the latter, you can consider refinancing your mortgage, taking out a home equity loan or line of credit, or getting a personal loan. You can also look for other sources of income, such as taking on a second job or starting a small business.

The best way to fund your home renovation is to develop a realistic plan and stick to it. Choose a loan that will allow you to pay it back on time, and remember not to borrow more than you can repay so you don’t get into more debt in the future.