How to Fund your Home Renovation

    How to Fund your Home Renovation

    Mar 09, 2021

    A renovation, on any room, is always a big project. Accompanying any large-scale project are those equally large (important) questions: Where am I going to get my materials? How long will this take? Do I have the right permits, and of course, how will I afford this? There are different methods you can utilize as you locate the funds for your renovation. Depending on how big the planned renovation is could determine which method works best for you. 

    Kitchen - $13,000 - $37,000

    Bathroom - $6,000 - $15,000

    Basement - $10,000 - $29,000

    Below are a few different choices you could choose for financing. You should speak with a financial advisor if you have any questions about these methods.


    Using cash to pay for anything is pretty straight forward. You save, budget, then use it. Unlike other methods of funding a renovation, you may not be able to pull out more cash to fund a misstep. That is why it’s important to A. give yourself a little cushion money in case you find yourself in a snag and B. double check your numbers. Maybe pricing for items went up or your desired contractor can no longer do your reno, so you must hire another at a different price. With cash, you can eliminate overspending, but the reno could take longer to complete.

    Home Equity

    Getting a home equity loan is another option for financing. With this loan, you borrow up to 85% of the homes value minus what you owe on it. Depending on your income, credit, and other factors this could be more or less. If you do not pay the debt to the lender, then they could force you to sell your home as payment to them. Read the fine print before you commit to this type of loan as the lender may charge you fees for participation or annual fees.

    Mortgage Refinance

    A mortgage refinance is when you take out a new loan on property you already own. If the current interest rates are lower than what you currently have on your mortgage, then you may want to look into refinancing your home. By doing this, you have the potential to lower your interest rate, lower your monthly payments (thus freeing up some money), and potentially get a new loan type and term. You could be saving more and paying off your home quicker.

    Cash-Out Refinance

    A cash-out refinance is similar to a mortgage refinance in the aspect that you are taking out a new loan on property already owned. The difference is that on a cash-out refinance, you are adding more to the loan. The difference in what your current loan is and what you add to it you get back in cash.

    Retirement Fund

    Homeowners can also choose to pull money from a retirement account to fund a home renovation. With this method you may end up incurring penalty fees for withdrawing the money ahead of schedule since this cash wasn’t necessarily meant to be used as reno funding, but rather to help you stay afloat after retirement.

    Credit Cards

    Credit cards may be your go to item if your home renovation isn’t too large. Credit cards have a limit and you have to be sure you are prepared to pay the card off in installments incurring interest or if you have the fund to pay it all off at once.