Before actually applying for financing, make sure you understand every aspect of your renovation project, knowing the amount of time and money you need exactly will make the financing become readily available. Are you simply improving your bathroom cosmetically, are you tearing down the wallpaper, are you tearing down a wall? Removing a sink? Adding a sink, replacing a shower? If your changes are purely cosmetic, you won’t require financing at all. I recommend you save up for the improvements instead. However, if you plan on ripping out your entire kitchen and replacing it with a new design, you are going to need a large budget with the possibility of over expenses. Once you figure out exactly how much money you require, consider some unexpected expenses, you can decide which financing option fits your monthly budget the best.

Below we detail some of your choices:

Home Equity:
If your renovation plans are massive, you can take out a loan against your home equity. Meaning the amount of money you’ve paid towards your mortgage. Your home equity is the easiest financing option out of them all, since lenders are eager to let you borrow from your home.

Cash-out refinancing:

In case you have a large amount of equity built up in your home, you can refinance the mortgage to a higher amount and the lender will cash out the difference between the new loan and your old mortgage balance. This is another good option if your plans for improvements are large.
Home equity line of credit:

A HELOC is also called a revolving line of credit secured against your home’s value. This works great if your home improvement project is “Do It Yourself” or is a pay as you go from the contractor. This means you can access the money you borrowed as needed with a checkbook or card that is attached to the loan itself.

Personal Loan or Credit Line:

For those simpler and cheaper home improvement projects, you can apply for a personal loan or a line of credit from your bank. Unlike the two options above, this option is not secured against your home, which means the lender will charge more interest to cover the higher risk of possible default. This also means you aren’t tapping out the resources in your home equity which could come in handy later in the life of your family for a bigger project. This financing option is not tax deductible, unlike the options mentioned above.

Using a Credit Card:
Another creative way of financing your home improvement project is by using your credit cards. This is also a great option if you are doing a “do it yourself” project like we mentioned above. There are some companies who offer zero percent interest as an introductory rate, which means you’ll save alot of money on the interest payments. Another thing to consider when using credit cards is to apply for a credit card at the store you are purchasing. They usually offer discounts and low interest rates which will help lower your expenses.