Financing a Kitchen Remodel Even with a Low Credit Score

GBC does not offer financing. Request a free in-home estimate for your kitchen remodel. The borrowing discussion below is historical information, not a GBC financing offer; check current terms with a lender.

Planning a kitchen remodel? Are there clear signs that scream your kitchen needs an update? Or maybe your kitchen has just started to become an eyesore after a few years.

The truth is: It’s all well and good. For many homeowners, kitchen remodeling is not an option but a dire necessity. For others, it may be a way to live out their dream of a modern, high-tech and visually gripping space. Whatever your reason, you deserve to have a space you feel comfortable and happy working in. For current mortgage and home-equity options, see the Consumer Financial Protection Bureau mortgage resources; for how credit-card terms work, see the CFPB credit-card resources.

Now, let’s tell you that you are not alone in this. In fact, kitchen remodeling is one of the most common and expensive home improvement projects in the US. Doesn’t this crazy hype around the kitchen tell you how important the place is? In fact, the contemporary kitchen is a world away from its traditional counterpart. A complete visual delight, the place is a hotbed of socializing, entertainment and juicy gossips. Wouldn’t you want to turn the spotlight on?

Not to mention, that it might be important for the workflow of your kitchen too. The new technology has led to a complete change in the way people use appliances. From the latest sensor-equipped fixtures to the hidden appliances to the new concepts in storage systems — the kitchen has seen quite a 180-degree change over the last few decades.

Now, I know what you’re thinking: “Yeah, yeah. We get that it’s good and increases resale value of the house. It doesn’t mean I have money just lying around for it”. Believe me, we get it!

The original article attributed a historical cost range of $12,589 to $33,067, with $21,668 described as an average, to HomeAdvisor. These figures are retained as original publication wording, not a verified current average or a GBC estimate. Request a current, itemized quote before deciding how much to borrow.

Wondering where to get this kind of money? There are a number of finance options that you can consider for your kitchen remodel if you have made up your mind.

Kitchen Financing Options that Use Equity in Your Home

Home-equity borrowing uses the property as collateral. Eligibility, approval time, interest, fees and repayment terms depend on the lender and the borrower; compare actual offers instead of assuming this is an easy or low-cost option. Missing payments can put the home at risk.

Compare the actual home-equity loan or HELOC agreement, including eligibility, interest, fees and repayment terms. Approval and cost depend on the lender and borrower; the home serves as collateral and missed payments can put it at risk.

1. Home Equity Loan (HEL)

A home equity loan typically provides a lump sum borrowed against the home’s equity. Its interest rate may be fixed or adjustable; the repayment terms must be read in the actual loan agreement. The CFPB explanation of home equity loans and HELOCs describes that distinction.

A fixed-rate loan and an adjustable-rate loan can have different payment behavior. Ask the lender what may change over the term, what fees apply and how repayment is structured. Interest deductibility is subject to the secured-home, use-of-proceeds and other requirements described in IRS home-mortgage-interest guidance; consult a tax professional about your situation.

On the downside, the option uses your home as collateral. Additionally, there may be closing costs and other fees to pay. Also, you will need to ascertain the equity of your property before even getting one. You may need an appraisal, which may add to the cost.

2. Home Equity Line of Credit (HELOC)

Lenders determine their own eligibility requirements. The original article’s statement that home value should be “at least 15% more than what you owe” is preserved only as historical wording, not a current lending rule or verified past offer. Ask a lender about the actual equity, income and credit requirements.

Like credit cards, most HELOC’s come with variable APR’s. This means that your interest rate can go up and down as per the market trends.

A HELOC provides a revolving credit line secured by the home. Compare the draw and repayment periods, possible payment changes, APR and fees in the actual agreement. Do not assume its cost will be lower than a credit card or another loan.

Both home-equity loans and HELOCs carry collateral risk. Costs and rates vary by product and borrower; compare the written offers rather than ranking them as universally cheaper or more expensive.

Kitchen Remodel Financing Options Without a Collateral

1. Financing Directly with Contractor Financing

You can ask your home contractor for a loan. The financing is generally done through an external source or a third party lender.

Ask whether a contractor refers customers to a lender and review that lender’s written terms independently; this article does not establish that GBC offers financing. A deferred-interest arrangement differs from a true zero-interest promotion: if its conditions are not met, interest may be charged back to the original purchase. Read the CFPB’s deferred-interest explanation before accepting such terms.

Also, be careful that you don’t end up losing your right to withhold the payments if you find that the work is not up to the mark. You should negotiate a fair contract in all cases. Once you decide to finance your project through a contractor, make it a point to dig his financing history by speaking to the other clients. Also, try and compare the terms offered by other players in the market.

2. Financing with Personal Loans

Personal loans are another category to compare. Approval, funding time, APR and fees depend on the lender and your circumstances; an online application does not guarantee eligibility or immediate funds.

Some personal loans are unsecured, while other products require collateral. Check the agreement rather than assuming all personal loans share the same protections or interest rates.

Compare the proposed funding date with the project schedule. Do not assume same-day approval or that a personal loan is always cheaper than a credit card; consider repayment obligations and the consequences of missed payments.

The original article’s personal-loan section said: “Some companies have a fixed limit where they let you borrow only up to $35,000 or $40,000.” This is preserved as historical publication wording, not a verified lending limit or offer. Ask the lender about the amount, term and repayment obligations applicable to your application.

3. Financing with Credit Cards

Archived original wording, not a current offer: The following paragraph is reproduced to preserve the originally published financing terms. Its generalizations are not verified past or current offers and must not be used as lending advice.

Credit cards are the easiest means to finance your remodel project. This is especially useful if you plan to make use of a credit card that charges 0% interest for a specific promotional time period. This helps hugely where you can divide the big expenses of a home remodel over multiple payments. Many of these cards come with the benefit of reward points and purchase protection too.

This quotation preserves the original article’s wording only. Check the issuer’s actual APR, fees, promotion duration and repayment conditions, and distinguish true introductory interest from deferred interest. The historical paragraph does not establish current availability, eligibility or tax treatment.

Archived original wording, not a current offer: The following paragraph is reproduced to preserve the originally published financing terms. Its generalizations are not verified past or current offers and must not be used as lending advice.

However, most credit cards charge a whopping 15% interest rate or even higher after the introductory 0% offer is over. This can be a huge setback. Be mindful that the interest rates on the credit cards are not tax-deductible in any way either.

This quotation preserves the original article’s wording only. Check the issuer’s actual APR, fees, promotion duration and repayment conditions, and distinguish true introductory interest from deferred interest. The historical paragraph does not establish current availability, eligibility or tax treatment.

Another option is store-branded credit cards. But before you indulge in this option, just ask yourself how often do you shop from the particular store, if it is convenient for you to pay off the balance every month to avoid paying the interest, and if the card offers any additional benefits.

4. Financing with Personal Savings

Using savings can avoid borrowing interest, but consider the effect on funds available for essential expenses and unexpected events. It is a budgeting choice, not a universal recommendation.

Review the project’s scope and your financial obligations before committing savings. A smaller scope or a later start may be worth considering if the planned expense would leave essential needs uncovered.

Making the Final Decision For Your Kitchen Remodel

There’s only one rule to making a call about finances — check your own wallet and your own expenses. In other words, make a decision based on your personal circumstances. What may work for someone may not even be an option for you. Generally speaking, consulting an expert may give you some ideas if you have any lingering questions. Ultimately, you want to pick something with a low-interest and something with manageable installments for your kitchen remodel.