Bathroom Remodel Financing 101: Your Options For Making Your Dream Bathroom A Reality

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You desperately need to renovate your bathroom, but you’re not sure you can afford it.

Maybe you have company coming over during the holidays and want to impress them. Or maybe you’re looking to increase the value of your home. Or maybe you’re simply sick and tired of your current bathroom and need to change it ASAP.

In any of these cases, you have financing options that don’t require selling a kidney. Let’s explore a few of the most popular and viable options to finance your bathroom renovation.

Line of Credit/Bank Loan

This is one of the most popular ways to get the funds you need to renovate your home. Your best bet is to speak to your bank about which of these options works best for you and your situation.

If done through your bank, you will get a reasonable interest rate.

However, if you have damaged credit, you might have to go through a private or third-party lender, who specializes in loans to rebuild credit, at a higher interest rate.

Home Equity Loan

A very solid and popular loan option for people whose homes have substantially increased in value while they’ve owned it.

These are less like traditional loans, and more like a line of credit. Your bank will approve you to borrow up to a certain amount of your home, while the equity in your home acts as collateral for the loan.

This would give you a better rate than a credit card, and the odds of being approved are reasonably good.

However, if you can’t make the payments for any reason you risk foreclosure.

Credit Card

Most credit advisors will tell you to avoid putting any type of major purchase on your credit card if you don’t have the money to pay it back right away—or at least have a plan to pay it back.

If you have the money (or most of the money) to renovate your bathroom, but want to put this purchase on your credit card to accumulate loyalty points or miles from your credit card, great. Pay down the balance right away and enjoy. There’s nothing quite like free money.

But, if you’re putting this on a credit card because you don’t have the money right now, and just plan to chip away at the balance, think about your other options.

The words “but I want it now” have gotten a lot of people in trouble with their credit cards over the years. The longer you chip away at it, the more interest you pay. You could end up paying anywhere from 30% to 300% more than the principal in interest payments. Or, heaven forbid, if you’re only making minimum payments, you could end up paying considerably more.

Department Store Credit Cards

You’ve likely been aggressively offered one of these when you walk into the front door at Walmart or The Home Depot.

Pretty much everything we just said above about traditional credit cards applies to department store credit cards. Actually, the damage could be even worse as most of these cards have an even higher interest rate.

These cards are great if you need to replace a $500.00 toilet. They aren’t always the solution for a $15,000.00 entire bathroom renovation— no matter what the person with the clipboard and the applications at the front of the store tells you.

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