Can You Finance Custom Home Renovations?

A photo of coin in glass bottle with capenter tool, Saving for new home concept

Fortunately for homeowners and construction companies and many more people and businesses involved in real estate, 2021 is turning out to be a much better year than 2020 was. With shut-downs all around the nation, the number of people who had their homes remodelled and renovated dropped dramatically. Not only was money harder to come by, but a lot of contracting companies were labelled as nonessential and thus weren’t even allowed to operate. Now is the time, however, at least according to experts, to go through with those home renovations. However, this brings up an issue that’s always present when making these decisions: Money.

Can you actually afford to go through with custom home renovations? Many people have started to hear about companies that will actually finance their renovation services, including both the materials and the labour, much in the same way a home is financed out through mortgage payments. Is this actually true? Let’s take a closer look at the topic.

Yes, and Also No

The fact is that, yes, some contracting companies do offer financing options for renovation packages. Some will separate these packages; e.g. you can get a room or an extension, but not necessarily a full home remodel. Others want an up-front payment and do not offer this option. It really all depends on the company. Of course, just because a company offers financing doesn’t mean you should go with it. There is a whole lot to consider here. More and more companies are offering financing options this year, post-shut-downs, but there are still plenty not offering this option.

Top 3 Reasons People Want Financing

Business group around the table

1: Getting the Reno Right Away

People seek out financing options because they can get the custom home renovations they want without having to put that big chunk of money down right away. Most people who get renovations end up paying for them all at once, and this can require a whole lot of cash. Some people are refinancing their mortgages or taking out loans just to make it happen, and so being able to finance renovations is something they deem a good thing.

2: Time to Save the Money

Another reason people finance is that most financing packages give you a year or even longer to make your first payment on the overall bill. This gives people time to save money. Many will save up not only for the initial payment, but they’ll budget out a second account to make those installments indefinitely.

3: Smaller Installments

Speaking of installments, this definitely matters to a lot of people. Rather than having to pay $10k upfront, for example, this can be broken down over the course of years, which means that a monthly installment on the bill is going to be exponentially less than paying for it all at once. It’s the same reason so many people end up with multiple credit cards. There’s something about this pay-as-you-go model that’s really intriguing to so many different people for many different reasons.

Should You Go the Financing Route?

Be very careful when you find financing options. It has to be something you’re prepared for. Going back to the credit card example: While most people have credit cards, over half of those people have debt. They haven’t been able to keep up with the payments. This is something that could easily happen with a bill as large as a home renovation job. So, just be very careful. Plus, even if you make all the payments, you will be paying a whole lot more for the job over time than if you were to just pay upfront. In other words, it might be in your best interest to avoid the financing. It’s something to at least consider.

Whether or not you can find financing depends entirely on the company. Even if you find a company that’s offering financing, that doesn’t mean you should just jump on that chance. This is something you should certainly discuss and think about before diving in, no matter what you choose. The best thing is to choose the right renovation company to start with.