Many people don’t have the cash on hand to deal with home renovations or repairs.
Others prefer to keep that money in the bank for an emergency, like unemployment.
A personal loan can provide the funds you need to fix your home’s problems or just make it a more pleasant place to live in.
Can you get a loan for home improvements?
Home equity loans and lines of credit may have competitive interest rates because they’re secured by your home.
Home equity loans may require you to borrow a lump sum. If you know exactly how much you need to borrow and you need it all at once—for a kitchen renovation, perhaps—that’s perfect.
And a home equity loan’s fixed interest rate can give you a predictable repayment schedule where you owe the same amount each month.
If you aren’t sure how much you need to borrow or when you’ll need it, a HELOC can save you money by allowing you to borrow smaller sums as needed.
HELOCs have variable interest rates, however, so your payment can fluctuate and may increase over time:
- U.S. Bank,
- Bank of America,
- Citi Mortgage,
- PenFed Credit Union,
and many other lenders offer home equity loans and lines of credit.
If you want to go the credit card route, a card with a 0% introductory APR may be ideal. It doesn’t have to be a card from a home improvement store.
Just make sure you don’t borrow more than you can repay before the introductory period ends, or you’ll be hit with a ton of interest.
Personal loans, which are unsecured and can be used for any purpose, are another option.
Unlike credit cards, they may have a set repayment schedule—say, three to five years—which gives you a timeline for getting out of debt and can keep your total interest cost down.
What is the interest rate for a home improvement loan?
As of mid-November 2019, the national average home equity loan rate was 5.92% fixed and the HELOC rate was 6.21% variable, according to Bankrate.
The average credit card rate was 17.58% variable, according to Bankrate, while the average personal loan rate for a borrower with excellent credit was around 10% to 12%, according to personal finance website Value Penguin.
Whatever type of home improvement loan you want, make sure to consider your options.
Disclaimer: This is not legal or financial advice. Please consult a legal or financial advisor for your specific situation.