What is deck financing?
On average, homeowners spend between $14,000 to $20,000 building a deck. Depending on the deck material, size, and other factors the cost of the deck can vary. If you don’t have the cash on hand or would rather save your cash for an emergency, you should consider deck financing. Although the cost of the deck loan may be higher than the cost of the deck, building a deck may still be a smart investment. In most cases, adding a deck to a home increases its value and makes it more desirable. Most homeowners recoup most, if not more, of their investment. Deck financing is fairly easy to qualify for and provides homeowners with a lump sum of cash to build a deck. Deck financing can also be used to improve or repair an existing deck. There are lenders dedicated to offering deck financing or some contractors may even offer deck financing. Most homeowners use an unsecured personal loan for deck financing. While there are other options available, unsecured personal loans are one of the least risky, easiest to qualify for, and fastest loan types available. Unsecured personal loans do not require collateral or money down and all credit types can qualify. If you default on an unsecured you risk lowering your credit score. However, if you default on a secured loan you risk losing an asset such as your home. A little later on we'll go over some of the requirements to qualify for a personal loan. PrimeRates can connect you with reliable lenders that offer deck financing up to $100,000 with terms up to 12 years and interest rates starting at 4.99%.
How does deck financing work?
While terms can vary depending on your lender, the general idea and structure of most deck financing loans are very similar. Most deck financing is easy to manage and understand. If you are unsure about anything we strongly urge you to contact the lender for clarification. When you use a personal loan for deck financing the funds are issued as a lump sum that you repay monthly with interest. If you are using an unsecured and fixed personal loan, the monthly payment and interest rate should not change during the loan term. For example, if you borrow $10,000 at 4.99% with a 5 year term your monthly payment should be about $189. Before you apply for deck financing you should determine what you deck should cost. To get the most accurate estimate you should consult a professional. Most contractors offer to come out and provide free estimates for homeowners. When you use a personal loan you are charged interest on the full loan amount, not just the amount you use. This means you should borrow what you need to avoid paying additional interest. In addition, your monthly payment is determined by the amount you borrow, the interest rate, and the term. Before signing into the loan you should know what kind of monthly payment you can afford. There are a variety of personal loan payment calculators available online that you can use to estimate monthly payments. You may need to extend the term in order to achieve a certain payment. Most lenders do not have an early payoff penalty meaning you can pay the loan off early without extra fees. We recommend choosing a lender that does not have an early payoff penalty and trying to pay the loan off early. Paying as little as 10% extra each month can save you hundreds of dollars on interest.Â
Can you finance a deck?
Yes, you can finance a new deck or deck repair. Although the dream of having an extravagant deck may be exciting, the idea of financing a large amount of money may be scary for some of us. Or perhaps you are not sure if you even qualify for financing. However, you should know that deck financing is relatively easy to qualify for and does not involve much risk for the borrower. In addition, some lenders offer extremely flexible terms, thus allowing borrowers to achieve affordable fixed monthly payments. PrimeRates has lending partners that offer unsecured personal loans that do not require collateral or money down. In addition, some of their lending partners have a minimum credit score requirement as low as 540. If you have credit challenges you may want to apply with a co-applicant. If you are unsure if you qualify or not, don’t be scared to apply. Your credit score will not be affected. Unsecured personal loans can be a good deck financing option for new homeowners since they do not require collateral or equity in your home.Â
What types of deck financing is available?
If you are considering deck financing, you’ll need to decide which option is best for you. You should consider how much you need to borrow, how long you need to borrow the money for, and what types of deck financing you can qualify for. While it’s up to you to decide how much and how long you need to borrow money, we can help you understand qualification requirements for a few deck financing options. Deck financing options can include. . .
#1. Personal Loan
Personal loans are one of the easiest deck financing options to qualify for. In addition, personal loans are one of the lowest risk options for borrowers. For these two reasons, their slightly higher interest rate may be easily justifiable. We have focused primarily on this option throughout this blog because it’s a top choice for many homeowners. You can secure a personal loan through a bank, credit union, or online lender. Online lenders are usually easier to qualify for and offer competitive rates and high loan amounts. In addition, most online lenders have fast application processes and fast funding. If you use financing offered through a contractor, you will most likely be using a personal loan.
#2. Credit Card
Compared to personal loans, credit cards usually have much higher interest rates and lower limits. While the reward points and convenience of a credit card may be attractive, you should seriously consider other options. Credit cards may help finance some of the materials but in most cases they are not the best option for financing labor and materials. If you can afford a high monthly payment you may be able to qualify for a credit card with a promotional 0% period. Most likely, you’ll need substantial income and an excellent credit score to qualify for a high credit card loan amount with a promotional period.
#3. Home Equity Line of Credit (HELOC)
Homeowners that have equity in their home may be able to qualify for a home equity line of credit (HELOC). HELOC loans are similar to credit cards in the sense that you have access to a maximum amount of funds whenever you need them. However, you only pay interest on the amount of money you use. While HELOC loans can be used for deck financing, it may be hard to qualify for. In addition, it requires homeowners to borrow against equity in their home while using the home as collateral. Most lenders allow homeowners to borrow up to 85% of the value of your home minus the amount you owe. Home equity loans can provide high loan amounts and low interest but are much more risky for the homeowner.
How Does Deck Size Impact Cost?
Larger decks require more materials and labor which can only mean one thing. . . more money. If you have the room to build a larger deck we highly recommend investing the extra money. You want to create a deck that fits your space and makes your backyard stand out. Deck materials can also impact costs. You may want to consider cheaper materials in order to afford a larger deck size. Most decks cost between $20 to $40 per square foot including labor and materials. This means a 300 sq. ft. deck could range between $6,000 to $12,000 and a 600 sq. ft. deck could range between $12,000 to $24,000. If contractors are slow they may offer a discount for committing to a larger job. Don’t be afraid to ask the contractor how you can get any kind of discount and make reasonable suggestions. What you should avoid is intensely negotiating with any contractor and discouraging them from doing their best work. You just want to be sure the deal you are getting is fair for both parties.
