How to Finance Kitchen Remodeling
- 1). Apply for a home-equity loan or a home-equity line of credit (HELOC) if your home has sufficient equity in it. These loans or lines of credit offer lower interest rates than most other financing options because they are secured by your residential property. An additional benefit of HELOCs is that they allow you to obtain money on an as-needed basis so you don't end up borrowing more money than what's needed.
- 2). Apply for a renovation loan through a qualified lender. Certain lenders offer renovation loans in conjunction with their refinancing program, which not only allow you to convert your current mortgage into a low fixed-rate mortgage but also allow you to borrow additional funds to be used toward the renovation of your property. Since the cost of renovation is spread over the entire term of the mortgage, you don't have to worry about making large payments to cover the cost of renovation. Another benefit of such programs is that the interest can be tax-deductible because it is included in your mortgage--you certainly can't do this with credit cards or personal loans.
- 3). Ask your contractor if they offer their own financing options or other flexible payment plans. Negotiating payment details with your contract is good option because you don't have to seek help from a third-party lender.
- 4). Take out a personal loan if no other option is available. The interest rates on personal loans typically are higher than other financing options. Certain lenders also may have higher credit and income requirements because these loans have no collateral--they are unsecured.
- 5). The last option would be to buy all the materials, appliances and supplies on credit and hire a contractor to do the work for your. This option is recommended only if you have a good deal of knowledge about the construction process and the materials involved. By doing this you can pay off the credit card balances over a period of time and the only cost that you will have to pay up-front will be the contractor's fees. Certain contractor's allow such deals where you provide the material and they provide the labor.
