A backyard renovation is an exciting investment in the future of your home – but it’s still a significant investment. Thankfully, it’s easier than ever before to make that investment more than manageable. With flexible financing options, you can smartly and confidently plan your dream backyard in a way that works for you.
While our landscaping and design experts at Brothers Grimm can’t give financial advice, we can point you to the best ways to finance a luxury backyard remodel. Here are four common types of financing to consider for your renovation.
Home Equity Loan Financing for Backyard Renovations
If you’ve built up a significant amount of equity in your property, a home equity loan could be a fantastic option for you. With this type of loan, you use your home equity as collateral to borrow against. You get the loan in a lump sum with a fixed interest rate, and the interest may be tax deductible.
Pros
- Consistent monthly payments
- Possible tax benefits on interest payments
- Lower interest rates
Cons
- Depends heavily on how much home equity you have
- Additional fees might be incurred
- Failure to pay can result in foreclosure
Cash Out Refinancing for Outdoor Renovation Financing
With a cash out refinance, you take out a new loan on your home that includes your existing mortgage plus the amount you need for your backyard remodel. For instance, if you have $100,000 left on your mortgage and need $75,000 for your remodel, your new loan would be $175,000 (not including closing costs).
Pros
- Lets you leverage mortgage rates
- Backyard remodel investment goes back into your home
- Typically lower interest rates
Cons
- Not as beneficial for individuals with less home equity
- Mortgage balance will increase (and payments can be higher)
- Have to pay closing costs (approximately 2-6% of the total)
Personal Loans for Landscape Remodels
Under the right circumstances, personal loans can be effectively used for financing renovations. Personal loans are fast and don’t require collateral, but they also tend to have higher interest rates and lower borrowing limits. If you don’t need to finance a large sum of money and can repay within a short period of time, then a personal loan can be a good choice.
Pros
- Simple and fast
- No collateral required
- Can be used for anything
Cons
- Typically higher interest rates
- Potential added fees
- Can have prepayment penalties
Things to Consider When Financing Renovations
There are a few critical factors to consider before you make any decisions around financing your backyard renovation:
How Backyard Renovation Payments Work
Many loans work similarly in that you get a lump sum payment and a fixed interest rate. However, different loans have different repayment timelines and requirements, so be sure you know exactly what you’re getting into (and consult a financial advisor if needed).
Neighborhood Standards & HOA Rules
Your city’s (and/or your HOA’s) standards will affect the kinds of renovations you do and how you do them. You’ll want to check this info before doing any sort of renovation planning.
Your Lifestyle & Goals
Every home renovation is an investment in your home’s value – but it’s also an investment in your happiness. Any renovations should support and improve your lifestyle. In addition, factors like your income and job situation will guide the types of renovations you do and how you fund them.
Start Designing Your Dream Outdoor Space Today
Interested in exploring ways to make your dream backyard come to life? Whatever you’re envisioning, we’re here to help. Contact us today for more information on planning and financing a backyard renovation.
