Whether you have to repair a broken window or want to update your kitchen, home improvement projects can come at a high cost. After materials, labor costs, equipment, and surprise expenses, you could quickly rack up a hefty bill. If you need some help making room in your budget to cover home renovations and repairs, you may consider some of the following financial tools.
If your paycheck won’t come for another week, but you urgently need to repair something in your home, a payday loan can help. You don’t typically need perfect credit or collateral to qualify for payday loans. Your eligibility can depend on factors in addition to your credit score, such as income, debts, and employment.
Many lenders offer online payday loan applications, so you can receive the money you need quickly and with little hassle. You usually have to repay payday loans when you receive your next paycheck to avoid late fees. Since payday loans typically offer smaller loan amounts, they may be suited for more minor repair expenses.
Home equity line of credit
If you own your home, you could consider taking out a home equity line of credit, or HELOC, to cover longer-term renovations. A HELOC has several similarities with a credit card. It’s a revolving line of credit, which means you can borrow from it as needed throughout a fixed drawing period. Unlike many credit cards, however, a HELOC is a secured loan. Your home equity, the difference between your home’s current value and mortgage, acts as collateral. If you cannot repay your HELOC, you could risk losing your home. Interest rates and payments could change over time, but there is often an initial withdrawal period during which you will not be required to make any payments.
Home equity loan
A home equity loan, like a HELOC, allows you to get a loan against the equity you have in your home. Instead of a line of credit, however, home equity loans come as one lump sum to use throughout your home improvement project. Options may be available where interest rates and payments will stay the same over time, so home equity loans can enable you to take out a substantial amount without any financial surprises.
Borrow from loved ones
Before you look into more traditional financial tools, you may want to check in with family or friends to see whether they can help cover some of the renovation expenses. The people closest to you might be able to provide you with more flexible funds without the strict repayment requirements that come with most loans. Borrowing from loved ones can save you time and money, especially if you have to make urgent repairs to keep your family safe, like patching a roof or fixing a burst pipe. If they can’t help with money, people may be able to contribute their skills or labor to help you keep costs low.
Use a credit card
A credit card offers you the flexibility to cover various home improvement needs, from emergency repairs to major renovations. Whether you need to fill some gaps in your budget or finance a whole project, a credit card could help.
There are a variety of credit card options out there that can meet different needs. As you choose one for your renovation project, some factors to consider include interest rates, fees, and rewards. Some credit cards offer cash back based on a percentage of your spending, which can help offset the costs of materials and labor. You may even find a card with additional deals for hardware stores or other handy retailers. However, keep in mind that you might need a good credit score to qualify for the card you want.
The bottom line
Home improvement projects take planning, saving, and budgeting. The right financial option for your home depends on your unique situation. If you need to finance a large-scale, time-consuming project, you might consider a home equity loan or line of credit. For smaller projects and emergencies, payday loans, credit cards, or even borrowing from family may better fit your needs.