How to Finance a Kitchen or Bath Remodel?

When deciding to renovate your kitchen or bathroom, one of the key items to consider identifying your budget and the best mode of financing it. Often homeowners will come to FR Kitchen & Bath with a specific budget in mind. If you’re just beginning to plan your project and wondering how you might afford to renovate, we have some good news to share and a few suggestions to consider in your planning process.

Certainly cash is king and if you have the cash on hand, it may make sense to consider a renovation that will enable you to pay without taking on any debt. This option may not be realistic for many of us, so if you do not have the cash available, rest assured you can still do your renovation and there are other finance options for you!

Home Equity Loan: If you own your home, you may have noticed your home value rise considerably in the past few years. With the rise in home equity value, The National Kitchen & Bath Association predicts that as we head into 2025, many homeowners will tap into their home equity to fund their next renovation project. With a home equity loan, the loan amount is tied to the home value. Rates may be favorable and you can pay in fixed installments up to 30 years. Read the NKTB article to learn more.

Personal Loan: A personal loan is often used for a kitchen renovation. This loan type does not require collateral. Instead, your loan is based on your credit and income to determine your loan rate. Personal loans are often fast and the payments are fixed over the life of the loan. Rates in this instance may be higher than other financing options.

Home Equity Line of Credit: A HELOC is a line of credit you tap into as needed over a set period of time. These loans may have a variable rate and repayment terms may be over a long duration. In this form of a loan, you can borrow as you need it, so it may be beneficial if you don’t have your budgets confirmed up front.

Cash-out refinance: In this sort of model, you replace your current mortgage with a new one that would include funding to support your renovation. This makes financial sense if the rate of your new mortgage is favorable compared to your current mortgage rate.

In all instances, we recommend you identify your financing options and determine the best option for you before you start the project. Always be sure to budget more than you think in the instance unexpected surprises occur during your project.