Renovating your property is an expensive affair, regardless of whether it’s for commercial purposes or private. The cost of renovating a single room is high enough, but renovating an entire home increases this cost astronomically. Equipment and supplies must be purchased, along with hiring professionals to perform the more difficult tasks. The costs add up, and fast.

Unsurprisingly, the expensive nature of property renovation has led many to explore the options available for financing their projects. In this article, we will be covering some of the best methods of house renovation finance, from home equity lines of credit, to simply paying for the project in cash. Let’s get started.


We’ll start with the most straightforward method – cash. Financing your house renovations using cash will require you to save until you have enough to cover the cost of your intended renovation. While this is easy on paper, it becomes unreasonable when confronted by larger projects. It’s one thing to save for a minor plumbing job or the redecoration of a room, but for the reconstruction of a dilapidated house, it’s a method available to few. As such, this method is best reserved for small projects.

Personal loans

For a low-risk method of house renovation finance, there are few options available that are as good as personal loans. A personal loan is an unsecured loan, meaning you don’t risk your assets should you default. You will, however, be expected to pay interest on top of the amount borrowed, though the rates for many personal loans are quite low.

This method can become difficult if you have a poor credit rating, however. With a poor credit rating, you might find that most lenders are unwilling to lend to you, due to the risk you pose. Even if you manage to find a lender willing to finance your project, it will often come at the cost of a high-interest rate, which could place undue strain on your finances.

Home refinancing

Home refinancing is the process of taking out a new mortgage against your home. Depending on how much equity you have in your home, you have the option to withdraw it in cash during the refinancing process. This is called a cash-out refinance. In practice, it involves taking out a new mortgage equal to the value of your current mortgage, plus the cost of the renovation project. You will pay off the old mortgage, leaving you with the remainder to invest in your renovation project.

This type of house renovation finance can be somewhat costly, and depends on what type of mortgage you take out. The monthly repayments are likely to be higher than other options, depending on your circumstance.

Home equity line of credit

Often referred to as a HELOC, this form of house renovation finance is comparatively cheaper than other alternatives. A HELOC charges a lower interest rate, but in exchange for the favourable cost, it is secured against your home. This poses quite the risk if you take out a loan you can’t repay, as defaulting on a HELOC grants the lender the right to seize the collateral assets, in this case, your home, to recover their losses. As such, you should ensure you can make the payments on time, before going through with a HELOC. Otherwise, you will put your home at risk.

Despite the risk posed by a HELOC, it is still an incredibly advantageous form of house renovation finance. This is partially due to its flexibility, something afforded to it by its status as a revolving line of credit. This means that once you have repaid a portion of the loan, you are free to withdraw that same amount at a later date as another loan. This can allow you to perform further renovations, or to spend the money on something else entirely.

When it comes to repayments, you will have around twenty years to pay the full amount, and ten years to make withdrawals. All in all, you will likely pay 2-5% in costs, which is fairly low compared to other forms of finance.

Renovation financing

While some of the aforementioned options require a fair amount of home equity, renovation financing does not. It is a unique form of house renovation finance, with the value of the loan being contingent upon the value of the house after the renovation. This is quite unlike many other loans, which are dependent on the value of a property before anything is done.

With this option, the existing loan against a property will be refinanced. With the cost of the renovation being added to the new loan. In this sense, it is quite similar to home refinancing. The work will then be done, and the loan exists the same as any other. While this loan is excellent for flexibility, you should take care to ensure the property will actually increase in value. Otherwise, you will be left with a larger loan and nothing to show for it.

Credit cards

If you need to make small refurbishments or upgrades to your home, but don’t have cash on hand, using a credit card may be a good solution. While it certainly will get the job done, it should only be considered as a last resort. Credit cards are expensive, often coming with quite a high, and fixed, interest rate. If you manage to secure a credit card with a low interest rate, it is likely only available for a very short time. Limiting the projects available to you. This makes credit cards an acceptable method of house renovation finance for small, private projects. But, for larger projects undertaken with commercial intentions, you are better off using other methods.


There is a wide range of house renovation finance options, each with its pros and cons. As such, you should take care to assess your situation and what you want from a renovation project. Then weigh up the advantages to using a particular finance option. If you do your research, you can ensure you aren’t overpaying for your renovations, and can enjoy the fruits of your successful projects more.