How to Finance a Bathroom Remodel: Find the Right Personal Loan

An elegant bathroom remodel
By Peter Andrew
Updated on: July 16th, 2021

Planning a bathroom remodel can be exciting. But don’t let money take away the fun. There’s a best way to pay for your bathroom remodel, and you need to find it before you talk to a contractor or hit the home stores. The three important factors to keep in mind when financing a bathroom remodel are:

  • Home equity loans may be ideal for big jobs.
  • Credit cards can work for small ones.
  • Personal loans may be just right for “not too big, not too small” projects.
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Budgeting for a Bathroom Remodel

The bathroom design possibilities may be unlimited but your budget is not. HomeAdvisor reckons you’re likely, in 2021, to spend $6,158 and $15,441 on this project. True, you might get below that lower limit if you’re careful. Some come in at $3,500. But $25,000 isn’t unheard of, either.

Unfortunately, most of us aren’t so great at saving, and we’re going to need some form of home improvement loan. Which is best?

Pick a Home Improvement Loan That Fits

“Measure twice, cut once” is a home improvement truism. It just means that it’s best to take care before you commit to a course of action.

This applies just as much to your decisions about bathroom remodel financing as it does to literally cutting a tile or strut. Because the wrong choice at this point can cost you much more than any replacement ceramic or timber.

How do you pick the most suitable form of financing? Luckily, that’s pretty straightforward–it largely depends on how much you’ll be borrowing.

How to Finance a Bathroom Remodel

How much do you want to spend, and how much can you afford to borrow? What monthly payment are you comfortable making? AmOne’s loan calculator shows you what your payment would be at various loan amounts and interest rates. Add the amount you plan to pay in cash with the amount you can borrow.

Once you know how much you can spend, work out a budget for your project. How much is it going to cost to realize your plans in terms of labor, materials and fixtures?

Don’t forget to include a cushion to cover unexpected eventualities, which crop up surprisingly often. If you’re the sort of person who always gives in to the temptation to spend “just a bit” more for top-of-the-line items and finishes, you’d better make that a big cushion.

Next, it’s time to evaluate borrowing choices.

Find Home Improvement Loans for Your Bathroom Remodel

Borrowing Big For a Spa-Like Bathroom

If you’re borrowing serious sums for your project — perhaps because it’s part of a more extensive home renovation or because you’re creating a really luxurious bathroom — you might consider home equity financing.

  • Home equity loans
  • Home equity lines of credit, or HELOCs

These tend to come with lower interest rates. And, because you’re spreading payments over a long time (maybe 15 or even 30 years), each month’s installment is likely to be low. But these also come with drawbacks:

  1. You’re putting your home on the line — lenders have a direct path to foreclosure, if you default
  2. These loans are mortgages and typically come with closing costs, which can be expensive
  3. It takes longer to get the money
  4. You might still be paying for this remodeling in two or three decades’ time, unless you accelerate your repayment
  5. They can be expensive in the end — even those low rates can’t save you from the costs of borrowing big sums over long periods

You may not be put off by these drawbacks. Many aren’t. But you need to recognize them.

Related: Personal Loans vs Home Equity Loans for Home Improvements

Borrowing Small For a Bathroom Refresh

It’s generally a bad idea to borrow money with a credit card. Not only are average interest rates high; you also risk harming your credit score if your balance exceeds 30% of your credit limit.

Nobody’s going to blame you for putting a few hundred on your plastic, providing you pay down the balance in two or three months. However, cards are useful for modest bathroom remodeling projects, when you’re providing the labor.

With planning, you can take advantage of credit card rewards or low introductory interest rates — as long as you clear the balance before the high interest kicks in. Personal loans are a great way to accomplish this.

Related: Personal Loans Beat Credit Cards for Large Purchases

Personal Loans: Goldilocks Finance For Your Bathroom Remodel

Chances are, your bathroom remodel will fall into the Goldilocks zone: not too big and not too small. And, if that’s the case, you should check out personal loans.

Personal loan rates tend to be much lower than those for credit cards. And, providing you keep up payments, they don’t harm your credit score.

True, they typically come with higher rates than first or second mortgages. But they have fewer downsides:

  • They are unsecured loans, meaning your home is safe
  • They’re cheap to set up — and you normally get the money quickly
  • You set the time over which payments are spread — So you can be free of the debt as soon as possible while keeping installments affordable

For many reasons, personal loans may be the “just right” option to finance your bathroom remodel.

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About the Author

Peter Andrew has been writing about personal finance for more than a decade. During that time, he’s offered news, information and advice on most aspects of financial life: from personal loans and credit cards to mortgages and even payday loans. He gave up big-city life 15 years ago and now lives contentedly in a small town in the middle of nowhere.