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If you’re planning to remodel your bathroom, one of the first steps in the project is figuring out how to pay for it. The average cost for a bathroom remodel is $12,104.If you don’t have enough saved up to pay for it, financing is available. Read on for information on six bathroom remodel financing options to consider.
Types of Bathroom Remodel Financing
There are two main types of options for financing a bathroom remodel: secured financing and unsecured financing.
Secured Financing
A secured loan is backed by collateral. In the case of a home remodeling project, the collateral would typically be the house itself. Secured loans generally have lower interest rates. However, if you default on the loan, your house could be repossessed by the lender.
Unsecured Financing
Most personal loans are unsecured. An unsecured loan, like a house improvement loan, does not require collateral. But unsecured loans typically have higher interest rates. If you fail to pay off the loan, your credit score may be damaged. Recommended: What Can Be Used as Collateral for a Personal Loan?
How Much Does It Cost to Remodel a Bathroom?
The national average cost to remodel a bathroom is $12,104. The cost can range from $6,637 to $17,613, depending on the scope of the project. If your bathroom remodel uses premium materials and fixtures, or if it involves significant plumbing and electrical work, the cost could rise to more than $25,000. To figure out what type of renovations are best for your bathroom, learning tips for home remodels can help.
What Are My Bathroom Remodel Financing Options?
Financing a bathroom remodel can done with:
HELOC (home equity line of credit)
Direct financing
Energy efficient mortgages
Credit cards
FHA 203(K) mortgages
Personal loans
Here’s more information about each option.
1. HELOC
With a home equity line of credit (HELOC), you can borrow against the equity you have in your home. You’ll typically need to have at least 15% to 20% equity to qualify for a HELOC. You can borrow the funds as you need them up to a certain limit, and repay the money monthly at a variable interest rate. HELOCs have lower interest rates because they use your home as collateral. However, if you fail to make payments, the lender could seize your house.
2 Direct Financing
Home improvement stores and some home remodeling companies may offer direct financing for a bathroom remodel. You receive a line of credit from the retailer which you use to pay for your bathroom renovation. Some companies may offer an introductory 0% APR. As long as you pay off the debt before the introductory period ends, you won’t owe interest. After that, interest will kick in and it may be high. If you decide to go this route, make sure to read all the paperwork carefully to be sure you understand the terms and rates.
3. Energy Efficient Mortgages (EEMs)
Borrowers can apply for an energy efficient mortgage (EEM) when remodeling their home to make it more energy efficient. With a bathroom remodel, this could include the installation of energy-efficient windows and replacing the toilet, faucets, and lights with more energy-saving models. To get an EEM, a professional home energy rater will need to do an energy assessment of your home before financing can be approved. You typically obtain an EEM through federally-insured mortgage programs like the FHA and VA.
4. Credit Cards
Credit cards are an easy convenient way to pay for your remodeling project However, their interest rates are high, and unless you can pay off the balance quickly, the costs can add up. You also need to have a high enough credit limit to cover the cost of your remodel. If you can qualify for a credit card with a promotional 0% APR, and you can pay off the full amount of your bathroom renovation before the promotional period ends, this may be a financing option you want to consider. Recommended: What Is APR on a Credit Card?
5. FHA 203(K) Mortgages
With this type of government-backed mortgage, a borrower can refinance their house and finance renovations like a bathroom remodel with one single long-term loan. Borrowers with low credit scores may be eligible for these loans. However, the paperwork required to apply for an FHA 203(K) is extensive, and the approval process is lengthy. But if you have the time to put into it, or if you have a lower credit score, you may want to explore this option.
6. Personal Loans
With a personal loan, the borrower receives a lump sum of money that they pay back monthly over time with interest. The funds can be used for a variety of purposes, including a bathroom remodel. Interest rates on a personal loan are usually lower than interest rates on credit cards. Rates are typically fixed, meaning your monthly payment will not change over time.
Using a Personal Loan for Bathroom Remodel Financing
To qualify for a personal loan for financing your bathroom remodel, you need to meet the lender’s personal loan standards, including having a certain credit score. A higher credit score will typically get you a better interest rate and loan terms. With many personal loans, you can borrow up to $50,000, which should more than cover the cost of your bathroom renovation. You can typically get personal loan funds quickly, allowing you to start on your project right away.Recommended: Guide to Plumbing Financing Options
Exploring Personal Loan Options
If you’re shopping for a personal loan, Lantern by SoFi makes comparing personal loan rates quick and convenient. By filling out one simple form, you can review offers from multiple lenders to find the one that best fits your needs and qualifications. Check your rate today with Lantern.
Frequently Asked Questions
What are the financing options for bathroom remodeling?
Are you allowed to remodel a bathroom with a personal loan?
How much does it cost to remodel a bathroom?
Photo credit: iStock/imaginima
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About the Author
Kelly Boyer Sagert
Kelly Boyer Sagert is an Emmy Award-nominated writer with decades of professional writing experience. As she was getting her writing career off the ground, she spent several years working at a savings and loan institution, working in the following departments: savings, loans, IRAs, and auditing. She has published thousands of pieces online and in print.
