Renovating your kitchen is a big project, and one that is likely to carry with it a fairly high price tag. For example, in 2013, it is estimated that the average cost of remodeling for a mid-range kitchen will be close to $60,000. This means that producing a budget before you start work is essential and, for most people, it will also mean raising the necessary finance. Here are 5 ways to financing your new kitchen renovation project:
1. A Home Equity Line of Credit (HELOC). If you have equity in your property, then one of your best options will probably be to look for HELOC funding. This form of loan uses your property as security for the loan, and attracts a low rate of interest, repayable at a variable rate. The approval process for this type of loan can take several weeks, and you may also need to pay for a home inspection report before your loan is granted.
2. A Contractor’s Loan. If you are intending to use a major contractor for your renovation work, then you may well find that the contractor’s firm provides its own line of finance. Rates will vary from one contractor to the next, so you will need to shop around. However, in a highly competitive market, it is often possible to secure a good deal from your contractor.
3. A Government Incentive Scheme. If, as a result of your kitchen renovation project, you intend to make your home more eco-friendly, then you should look to see whether you are eligible for assistance, either at a federal or state level. There are currently several schemes offering finance for solar power installation and other energy saving measures.
4. A Personal Loan. Many people are tempted to finance at least some, and often a significant portion, of their renovation by using their credit card. This is generally a bad move, and a better option is to seek out a personal loan. This may not be the cheapest option, but with often low, and fixed, rates of interest, a personal loan will certainly be cheaper than running up debt on your credit card account.
5. A Title 1 Home Improvement Loan. A Title 1 loan is obtained through a private lender, but is government backed, and allows for home improvements of up to $25,000 to be financed over a period of up to 20 years. Rates are generally about half of that for a personal loan, and loans are available from a range of approved Title 1 lenders including banks, savings and loan associations, mortgage companies and credit unions.