How to Finance Your Kitchen Remodel

Beautiful modern kitchen

A stunning, well-fitted kitchen makes meal preparation a walk in the park. Plus, upgrading the heart of the home can lure potential buyers and possibly add a little extra value to your home. But before you can host a dinner party with your double ovens and marble countertops, you’ll have to tap into some extra cash for the remodeling job.

Kitchen remodeling is one of the most common home upgrade projects. If you need financing, there are many available options, including home equity loans, home equity investment, personal loans, and credit card financing. Below is an overview of the various types of kitchen remodel financing options to help you determine which option is best for your upcoming project. 

Types of Available Kitchen Remodel Financing Options


There are two categories of kitchen remodel financing options. These include secured loans and unsecured loans.

Unsecured Loan Options

An unsecured loan involves a financier providing you a loan without requiring any collateral. Unsecured loans are subject to your personal credit record. 

There are two categories of unsecured loans:

1. Credit Cards 

Credit cards are not loans in the literal sense of the term. All the same, you can use credit cards for small expenses. Using your credit card to finance a kitchen remodel project is a good idea but only for low-budget upgrades. Using them for a bigger upgrade can result in an accumulation of very high interest if you don’t pay it off quickly. Only use this option if you’re sure you can repay right away. However, you can use the credit card to finance small purchases for the project and pay them off quickly.

2. Personal Loans (Home Improvement Loans)

Personal loans are popular because they’re relatively easy to get. Compared to secured loans, most lenders process the money relatively quickly, which is convenient for a kitchen remodel. The only hitch is the interest rate. Your credit score directly impacts your interest rate — if you have a higher credit score, your interest rate will be lower compared to applicants with lower credit scores.

The main advantage of unsecured loans is the lack of collateral. This means you won’t put your house at risk in case you fail to pay back your loan or are late with your payments.

Secured Loan Options

Secured loans are offered based on the value of your property and your credit history. For home improvement projects like kitchen remodeling, the collateral is usually your home. Lenders calculate the amount and interest rates based on the collateral value and your credit history.

The  advantages of getting a secured loan are: 

  • Lower interest rates 
  • Longer repayment periods 
  • Flexible and competitive loan plans

However, since you are putting up your home as collateral, you run the risk of losing your house if you’re unable to pay off the loan. Make sure to choose a plan that best suits your family and matches your personal needs.

The types of secured loans include:

1. Refinancing

Refinancing your mortgage offers a convenient way to finance your kitchen remodel. It replaces your standing mortgage with a new agreement and rates. With refinancing, you get to choose a mortgage with a lower interest rate and favorable monthly payment plan. If the new loan is bigger than the initial one, you may use the extra cash to finance your kitchen improvement project.

Refinancing comes with its drawbacks, which include:

  • Appraisal fees 
  • Origination fees
  • Taxes
  • Resetting the clock on your mortgage

2. Home Equity Investment

With a home equity investment, you can tap into your home’s existing equity and get the funds for your renovation project. Point invests in a portion of your home’s equity and gives you a lump sum of cash you can use for anything you want.

There are no monthly payments. You will also enjoy a flexible term of up to 30 years. Once you are ready to buy back the equity, you pay back the original amount received, plus a share of your home’s appreciation. 

3. Home Equity Loan

A home equity loan uses your home’s equity as collateral. To get a home equity loan, you need to deduct the mortgage outstanding from the current home value. 

You can repay your loan in regular fixed monthly payments or all at once within an agreed-upon timeline.

With a home equity loan, market fluctuations won’t affect the amount you owe. Instead, you’ll have a fixed interest rate, and you’ll pay off the amount over a period of time, usually between five to 30 years.

4. Home Equity Line of Credit (HELOC)

There is a lot of confusion between a home equity line of credit and a home equity loan. In reality, these two funding options have a lot of differences between them. While a home equity loan is a one-time finance option, a home equity line of credit is a revolving line of credit that you can use over a certain amount of time. The home equity line of credit works in similar ways to a credit card. The only difference is the collateral involved. 

A HELOC normally has a 25-year term, broken up into a draw period and a repayment period. The draw period typically lasts for 5 to 10 years, during which you can borrow as much as you like within the line amount and make interest-only payments. This is followed by a repayment period that generally lasts 10 to 15 years. During the repayment period, you must pay off the principal in addition to the interest. If you know you’ll be able to pay back the full amount plus interest within the full term of the HELOC, then this is another option for you.

Know Your Options to Finance Your Kitchen Remodel

Remodeling your kitchen is a worthwhile investment because it makes your life easier and might even boost your home’s resale value. The best financial option for your remodeling project depends on a number of factors, of course. Between your credit score, the project’s total cost, and the amount of equity you have in your home, you may have a few different opportunities.

If traditional financing options don’t fit your situation, try a home equity investment from Point. With our HEI, you can leverage your existing home equity and potential future equity in exchange for up to $350,000 with no monthly payments over a flexible 30-year term. You maintain full control over your home, and you simply have to repay the amount plus a percentage of your home’s appreciation value when you sell, refinance, or come into another source of funds. 


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