You envision your home as a space for memories, for comfort, and for growth. But realizing that vision may require major work, which feels like it’s getting more expensive by the day.
Lately, even straightforward renovations run well into five figures, and costs aren’t slowing down.
We can’t alleviate the sticker shock, but we can help you find the right financing solution to create the space you desire for your family.
In many cases, home improvement loans are the most efficient solution for enhancements, updates, and major repairs.
Whether they’re right for you depends on:
- Your home’s value and your equity in it
- How much you’d like to borrow
- The nature of the project
- Your credit and financial history
Below, we’ll walk through the ins and outs of home improvement loans, so you can realize your vision responsibly, affordably, and without jeopardizing the financial footing you’ve worked so hard to build.
How home improvement loans compare
If renovations are on your radar, then you’re probably considering a home improvement loan as well as a home equity loan, HELOC, or vendor financing.
These are completely different products with distinct pros and cons, so let’s take a closer look at how they work.
- A home improvement loan is an unsecured one-time personal loan, meaning no collateral and no lien against your property. It’s generally for smaller amounts—think thousands or a few tens of thousands—although limits depend heavily on your income and credit.
- A home equity loan is a one-time loan secured by your home’s value. Thanks to the collateral, you can borrow larger amounts at lower rates over longer periods. A typical limit is 80% of value, combined with any mortgage or other loans. However, underwriting is significantly more involved, since the lender will hold a lien against your property.
- A home equity line of credit (HELOC) is similar to a home equity loan, but with a revolving balance (like a credit card) to draw on as needed. As long as you make minimum payments and stay under a limit, you may borrow as much or as little as needed.
- Vendor financing is often available through contractors, installers, manufacturers, or banks they partner with. Rates and loan terms vary widely depending on the parties involved. Vendor financing may include a lien against your whole property or just the items installed, but it doesn’t always.
Key advantages of home improvement loans
There’s no one-size-fits-all financing solution. What’s prudent for one homeowner might be suboptimal for another who’s planning exactly the same project. That’s why we take a consultative, totally personalized approach with every client.
That being said, home improvement loans have a few standout features that are well suited to certain needs.
No collateral, no appraisal, no lien
Home improvement loans don’t use your house as security, so they leave it unencumbered.
The lender won’t require an appraisal and won’t hold a lien against your house.
Count on a fixed rate
Variable HELOC rates make it hard to plan your finances for the long-term. With all the interest rate volatility we’ve seen in the last few years, most borrowers are anxious about exposing themselves to that kind of uncertainty.
Naturally, the exact rate depends on your financial profile. However, if you have strong credit and income, then your rate may be surprisingly close to that of an equity loan. In most cases, you can lower it even further by committing to automatic payments before funding.
Long loan terms available
You plan to enjoy your home improvement project for years to come, so you might want to repay it over a longer period, too.
The David Haley team facilitates home improvement loan terms up to 12 years—some of the longest and most flexible in the industry. With gradual repayment and no prepayment penalty, it’s easy to manage your cash flow for all of life’s other needs and surprises.
You’re able to shop around
Vendor financing is convenient, but most contractors and vendors give exactly one option: theirs.
Is the rate competitive? Are the terms favorable?
But without comparing apples to apples, who can say?
Home improvement loans are issued by a third party of your choosing. You can and should shop around!
Cover any improvement project
Home improvement loans can be used to fund any renovation, addition, upgrade, or repair you have in mind. Unlike vendor financing or certain equity financing, you can use it for whatever project (or projects) you deem valuable.
When to consider other loan products
We can’t and wouldn’t give specific advice before discussing your financial position and goals one-on-one. There are simply too many variables, so we’re here to help you understand how each one impacts your financial picture.
Sometimes, that conversation leads us in a different direction.
If any of the following apply, then a different kind of loan product might be advantageous.
- You need a very large amount of cash, or you aren’t yet sure how much you’ll need.
- You expect to borrow more than once, but the timing isn’t certain.
- The IRS allows interest deduction for your project.
- At least part of the loan is for other purposes, like debt consolidation or college tuition.
- Your home equity is stronger than your credit history.
Other loan products have their own drawbacks and limitations, so discuss them with a lending professional before making a decision.
Why work with David Haley & team?
Home improvement loans are terrifically straightforward.
They’re often the simplest solution for a modest or medium-sizes project.
Regardless, think carefully about how your improvement financing supports your financial goals. Our goal is for you to meet your needs and realize your dreams in a way that supports your long-term financial health.
Our team is here to navigate all your options and their long-term impact, equipping you to move forward with confidence.