In our last blog we talked about some ways to get maximum value for the money that you have available for your home renovation project. We know, though, that most people don’t have several thousand dollars at their disposal at any given time to pay for a home reno project. Whether you have concrete plans to remodel in 2016 or a new custom garage is just a dream at this point, we’d like to share some of the ways that you can finance your project.
Many of the projects that Tailored Living does for its clients are under $10,000, and often things like closet remodels can be done for just a few thousand dollars. Don’t let the idea of cost put you off. Instead, find out what it might realistically cost for the project that you want. Tailored Living offers free consultations and can actually come into your home and give you an estimate. This may be a great place to start when planning how you’re going to pay for your renovation.
For now, here are some of the options that are available, depending on your current financial situation, the state of your mortgage and the current value of your home:
1) Use your line of credit. If you have significant equity in your home, you may be able to get a line of credit from your bank if you don’t already have one. Your line of credit offers lower interest rates than other forms of borrowing, and it’s a more secure way to borrow because it is tied into the value of your home.
2) Get a loan. If the project you’re planning is substantial in price, or if you have to pay the entire cost of the reno up front, a loan may be a better option. You’ll have to be disciplined about making payments, though. Unlike a line of credit, the payments will be fixed, but if your monthly budget can handle it, this can be a viable way to go.
3) Charge it. This is probably the least favourable option since it is almost always the one that comes with the highest interest charges attached. However, if your project is fairly small, say a couple thousand dollars or less, it may be worth considering. Just be sure that you crunch the numbers and figure out how much interest you’ll actually pay if you aim to pay off the entire bill within, say a year.
4) Save, save, save. Sometimes the best advice is the good old-fashioned kind: set aside and save a small portion of your income each month. If doing a home renovation is a priority for you, you’ll have the motivation to figure out how best to do this. Maybe it means dropping your gym membership or not eating out for a year and instead putting that money into savings. It is surprising how quickly money can add up this way. Perhaps it will take you until 2017 before you actually have enough to pay for your remodeling project, but you will be free of paying back any loans plus the interest that comes with it. There is much to be said about the good feelings that come with paying for something on your own, up front, and not giving any money to the bank.