Personal Loans for Home Improvement

Benefits of using a personal loan for home renovation

The benefits to using a personal loan for home improvements include:

• Receive funds quickly
• Straightforward, simple application process
• No need to put up collateral
• Payments stay the same for the loan term, which can make budgeting easier

Alternatives to using a personal loan for home improvements

Alternatives to using a personal loan include home equity loans, home equity lines of credit, cash-out refinancing and credit cards. The option that works best for you can depend on your finances and the type of home improvement project.

Cash-out refinance

Cash-out refinances leverage your home’s equity to secure a new mortgage and replace your current mortgage. You borrow more than you currently owe on your first mortgage and receive the difference as cash.

Home equity loans and home equity lines of credit

Home equity loans and home equity lines of credit (HELOC) are both types of secured loans where the equity in your home acts as collateral. These are both considered second mortgages.

A home equity loan provides a lump-sum payout and usually has a fixed interest rate. A HELOC allows you to tap into a line of credit for a draw period, when you must make only minimum payments. You can borrow what you need during that period, then repay it during the repayment period.

Because of the way you receive funds, a home equity loan can make sense if you know how much you need to borrow. A HELOC can make more sense if you’re not sure how much the project will cost, and if the costs are spread out over a period.

Credit cards

Using a credit card can be the right move for lower-cost renovations and repairs, particularly if you can pay the balance by the time the payment is due. Credit cards may also offer benefits such as points or miles that can be redeemed for rewards. However, using a credit card for large-scale home repairs means you will risk incurring interest if you cannot pay off your balance in full by the due date.

Some credit cards offer a low intro APR on purchases. It can make sense to finance home renovations with a low intro APR card if you can pay off the purchases by the end of the introductory period.

Deciding whether to finance home improvements with a personal loan

A personal loan for home improvement may be the right choice if you:

• Can easily fit the monthly payments into your budget
• Know how much you will need for home improvement project
• Are considering a low-to-medium cost project – it may make sense to use cash or credit for smaller projects, and to consider tapping into your home’s equity for larger ones

Citi offers personal loans to both existing Citi customers and new Citi customers that meet specific eligibility criteria, including an established credit and income history along with additional factors determined by Citi. If you think you could benefit from a Citi Personal Loan, apply online today.

This article is for educational purposes. It is not intended to provide legal, investment, or financial advice and is not a substitute for professional advice. It does not indicate the availability of any Citi product or service. For advice about your specific circumstances, you should consult a qualified professional.

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