How to Finance a Renovation: Part 2

How to pay for a renovationYou’ve read our first blog post in the series about what you’ll need to consider when planning for a renovation, including the typical cost of home additions and how to get your budget in place. Today we’re sharing some different ways that people choose to finance their home renovation, whether it’s in the kitchen, bathroom or anywhere else in your home!

Popular Ways to Finance Your Renovation

  • Bank Loan – A bank loan is one of the most popular and easiest ways to pay for your renovation. Fixed monthly repayments are automatically withdrawn from your bank account either weekly, biweekly or monthly. If you can afford it, weekly payments will help lower the amount of interest you pay and will reduce your debt load much more quickly.
  • Home Equity Line of Credit – Using a secured line of credit is another very popular way to pay for a home renovation. This type of loan has flexible repayment terms and can come with a fixed or variable interest rate. The interest rate for this type of loan is usually lower as the equity you have built up in the house is securing the loan. This allows you to pay for your renovation as you go or in installments. You will be able to borrow a set amount of money and either pay off all, or some, of the balance each month.
  • Mortgage Refinancing – If you choose to refinance your mortgage to pay for your renovation, you will be able to spread your payments over a longer period of time at a lower rate than a personal line of credit. You’ll also have access to as much as 80% of your home’s value. This type of financing often includes legal fees, appraisal fees and often penalties, which would be considered against other borrowing options.

If you recently completed a renovation, how did you choose to finance it and what factors were most important to you? Share your experiences with us or contact us to learn more about what you’ve just read!