Time for a Kitchen Upgrade? Don’t Drain Your Savings

Chances are that your kitchen is one of the central hubs in your home. It’s probably where you set your keys down after a long day, where your family gathers together for meals, and maybe even where your kids spend time doing their homework each afternoon. 

Over time, though, kitchens become outdated. And when you’re spending a significant amount of time in that area of your house, you probably want it to make you happy.

Whether you’re looking to simply refresh your cabinets, want to replace aging appliances, or are looking for a total gut-job remodel, the cost of renovating your kitchen can add up quickly. Here’s a look at some of the best ways to fund a kitchen upgrade, and how you can avoid even touching your savings account in the process.

How much a kitchen update can cost

The cost of updating your kitchen will depend on a number of different factors, including your property’s age, size, and even location. Beyond that, though, your kitchen reno price tag mostly depends on what exactly you plan to update.

• A minor update might include painting your cabinets, updating your light fixtures, and installing a new kitchen faucet.

• A mid-range update might also mean updating old appliances, replacing your kitchen sink, and installing a new range above your stovetop.

• A major kitchen update could mean everything from installing all new cabinets, countertops, lighting, and flooring to gutting your kitchen and changing the entire floorplan.

On top of how much you update in your new kitchen, your cost will also depend on the materials used in your renovation. Adding a new slide-in stove/oven combo could be a few hundred dollars, while installing a professional-grade gas range and double oven could easily be thousands. Updating your laminate countertops could set you back a couple thousand dollars, while having custom quartz countertops might have a price tag nearing $10,000. 

Just for reference, according to data from Home Advisor, the average kitchen remodel can run homeowners anywhere from $13,371 to $38,220.

Common ways to pay for your kitchen upgrade

Whether you’re facing a $7,000 upgrade or a $70,000 renovation, you might be wondering how on earth to pay for your new kitchen. While tapping into your savings could certainly be one option, it might not be the best one for many homeowners. 

That’s because depleting your savings for home renovation projects can reduce your emergency savings safety net. This leaves you financially vulnerable if an unexpected expense were to occur, with no way of quickly pulling that money back out of your home.

Instead of draining your savings account, here are some alternative ways to pay for your kitchen upgrade.

Using credit cards

Credit cards are a popular way to pay for all sort of household projects. They are convenient, allowing you to buy the various materials and appliances needed for your update. They may also offer miles, points, or cash back, meaning that your kitchen upgrade can actually earn you rewards. 

In some cases, new cardholders may even be able to take advantage of introductory 0% APR purchase offers. With these, you’re able to fund a kitchen update and pay it off over the course of a few months, without incurring any additional finance charges.

With that said, credit cards may involve extra costs, such as interest or annual fees. Many of your contractors may also add a processing surcharge to your bill if you pay with a credit card. 

Tapping into your home’s equity

If you have equity in your home, you may be able to tap into this with a home equity line of credit (HELOC),  home equity loan, or even a cash-out refinance. Each of these will allow you to pull money from your home as needed for various renovations and update projects. 

Though closing costs may be involved, home equity products are secured by your property. Because of this, they often have lower interest rates than other consumer products (like credit cards).

Taking out a personal loan

One of the most popular ways of paying for a kitchen upgrade is to take out a personal loan. 

Personal loans are unsecured products, allowing you to borrow money from a lender without using your home as collateral. You’ll often receive your personal loan funds in a day or two (or sometimes less!) and can spend them as needed on your renovation.

While there is interest on personal loans, it is typically lower than the rates charged by credit cards. One of the biggest benefits, though, is that you can spend this money like cash, allowing you to pay vendors and contractors who might not accept credit cards (or charge a fee for doing so).

Bottom Line

Updating your kitchen can add value to the property and change the entire look of your home… not to mention, making it a room you love to enjoy again. However, these updates often come with a hefty price tag, and may be well into the five- or six-figures when all is said and done. 

If you’ve decided that updating your kitchen is in the cards, consider whether a personal loan is the right way to fund the reno. The right loan can give you access to quick funds with a competitive interest rate, enabling you to get started on your brand new kitchen.