How to Finance a Kitchen Remodel?

What is the average cost to remodel a kitchen?

Understanding why financing a kitchen remodel may be necessary starts by understanding the cost. Depending on the type of remodel you’re tackling, minor or major, the average cost can vary drastically. For a minor remodel that includes items such as new flooring, freshly painted walls, new countertops, updated appliances, and cabinet refurbishing, you can expect to pay around $24,000.

Major remodels that include more extensive renovations such as custom cabinetry, expansive countertops, custom lighting, advanced new appliances, and more can cost around $69,000. It goes without saying that these costs are expensive. Very few people can likely afford to pay this out of pocket up front, which is where kitchen remodel loan can come in handy.

What influences the cost of kitchen remodeling?

While the above costs are just averages for kitchen remodels, there are a number of factors that can influence your bottom line price. When looking at kitchen remodel financing, you can use a loan to pay for some of or all of the cost of your remodel. Identifying where the majority of your cost is coming from can help you determine where financing would be most beneficial:

1. Size and location of the kitchen

If you are increasing the size of your kitchen, it will come at a high cost. This type of renovation will include removing and reframing walls, taking out appliances to move them, completely destroying certain aspects of the kitchen, and more. Due to the extensive labor involved, the size and location of your kitchen have major impacts on the overall cost.

2. New appliances required

Appliances can be expensive depending on what you are trying to install. Installation costs alone for new appliances can range from $3,000-$6,000 on average. If major piping rerouting needs to be performed for new appliances, this cost can skyrocket.

Related: Appliance Financing

3. Countertops and cabinets

When looking to finance a kitchen remodel, using a loan for the purchase of new countertops or cabinets can be a smart choice. Countertops can range in price based on size and material, but common examples of material include: granite, soapstone, marble, quartz, wood, bamboo, and others. Some of these materials can get quite high in price, and that’s not even factoring in cabinets that may be matching the countertops in color.

4. Installation and labor costs

Installation costs, in general, are a massive part of any kitchen remodel. You will likely end up paying thousands of dollars for labor alone, not including any of the costs required to purchase the new appliances, countertops, cabinets, and more.

5. Kitchen Flooring

Ripping out old floors and replacing them with new floors is expensive for two reasons: the labor and the new floorings’ material. Prices for reflooring a kitchen can vary based on these influences but can get as high as $4,500 if you are choosing to use natural wood or a specific type of flooring.

6. Doors and windows

As with the other items on this list, doors and windows will vary in price depending on material and style. Sliding doors barn doors may have a different cost than a simple hinge door. Floor to ceiling windows will have a different price than standard square windows. In general, the cost for doors and windows will likely fall close to $1,000.

7. Plumbing and other wall work

Plumbing is the part of a kitchen remodel where a person can save the most money. If no new pipes need to be put in and nothing needs to be reworked, plumbing in a kitchen remodel may cost next to nothing. However, plumbing can also be one of the most expensive parts of a remodel if new pipes need to be installed for new appliances.

Personal loans for financing a kitchen remodel

As evident, there are a variety of factors that can influence the bottom-line price of a kitchen remodel. With so many expensive aspects to a remodel, financing the job makes sense for those who can’t afford the expense out of pocket. Personal loans can be an excellent financing strategy. With a personal loan, you get access to the following:

• Lump sum of money upfront, with amounts ranging up to $100,000
• Interest rate between 6-36% depending on income, credit history, and other factors
• Repayment period between two-to-seven years on average

The majority of personal loans are unsecured, meaning a loan for kitchen remodel purposes will likely not require any collateral. Cutting your kitchen remodel cost by using a personal loan for some of, or all, the expense can help you dedicate all your focus to the project.

Related: Home improvement loans

Pros and cons of kitchen remodel loans

With any type of financing, there are a number of pros and cons to keep in mind before applying for the loan:

Pros of a loan for kitchen remodeling

• Quick access to cash means the remodeling job doesn’t need to be delayed
• Fair interest rate depending on your credit score
• No collateral in most cases

Cons of a loan for kitchen remodeling

• Your interest rate may not be favorable if you have poor credit
• Not as many benefits as other financing options

How to get a kitchen remodel loan?

Assuming a kitchen remodeling loan is something that seems right for you, here’s the general process you’ll go through if you apply:

1. Determine how much you need to borrow with the loan
2. Gather personal information such as address, proof of income, birth certificate, etc.
3. Research different lenders and compare prequalification offers to find the best interest rate
4. Select a lender and apply
5. Receive approval or denial
6. Begin repayments if approved

As you can see, the process of securing a kitchen remodel loan is relatively simple. There are a variety of lenders who will offer personal loans that can be used for this purpose, such as banks, credit unions, and third-party online lenders, so don’t settle on the first offer you get.

Other ways to finance a kitchen remodel

A kitchen remodel personal loan may not be the right choice for you. Fortunately, there are a myriad of answers to ‘can you finance a kitchen remodel?’ In fact, the best way to finance a kitchen remodel, for your specific job, may not be a personal loan. Consider some of the following options:

1. Credit cards

For remodeling costs that aren’t astronomical, putting the expense on a credit card may give you a lower interest than a personal loan. Keep in mind that extremely high expenses on a credit card may be costly in the long run, but if you’re able to pay it off relatively quickly then a credit card can be a smart financing strategy.

2. Home equity loans and HELOCS

Home equity loans are a specialty loan type that are a second mortgage, received in a lump sum, and repaid over terms as long as 15 years. Due to this lengthy tenor, interest rates are often under 10%, meaning it could be cheaper than a personal loan.

HELOCS, or home equity lines of credit, on the other hand are credit lines that you draw from as needed, with tenors up to 10 years. Rates for this type of financing are low, but can vary greatly depending on personal circumstance.

Related: Home Equity Loan vs HELOC

3. Cash-out refinance

Cash-out refinancing involves replacing your current mortgage with a new version that provides funds for a remodel. This makes the most sense if the new APR you can get is less than your current one. Just be sure when taking out a new mortgage that you will be in the house long enough to get past the cost of refinancing.

Learn more: How does a cash-out refinance work?

4. Federal programs

Title I Property Improvement Loans and the Energy Efficient Mortgage Program are two convenient options provided by the Federal Housing Administration. The former must be secured by a deed of trust or mortgage if your remodel will be over $7,500, though, and the energy efficient program can only be used for renovations that help make your home more energy efficient.

How to save money while remodeling your kitchen?

There are a number of ways to save money when tackling your kitchen remodel. Consider some of the following:

• Avoid installing new pipes or appliances that require reworking of current plumbing
• Avoid expanding the size of your kitchen
• Don’t splurge on expensive material for countertops
• Budget for more than you think you’ll need
• Start by focusing on the big renovations, and slowly integrate new renovations over time

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