Home improvement projects can enhance your property and increase your home’s value. Adding a patio deck or upgrading your yard could be the perfect way to create a backyard paradise for relaxing or entertaining.
Home improvement projects aren’t cheap, and costs can add up quickly, depending on your plans.
The best way to finance a deck or backyard project depends on your needs and lender requirements.
With good credit, you may qualify for a personal loan to fund your home improvement project, but other options exist.
How Much Does It Cost to Install a Deck or Patio?
Installing a deck or patio is no small project. It can also be an expensive endeavor depending on the scope of your project.
Whether it’s a DIY project or you’ve hired someone for the build, there are several costs to consider before you start.
Below are some costs you may face when installing a deck or patio.
Design and Style
The style of deck or patio you choose will dictate costs, which can vary by several thousand dollars depending on how elaborate you choose to get with your design. A multi-level deck can increase costs significantly.
Square Footage
Building materials are generally sold by the square foot, so a larger project will increase build costs.
Decking Materials
Costs for deck materials vary drastically depending on the type of wood or material you decide on for your project. Choosing softwoods for your build could save you money, but they may not be as durable as composite or more exotic hardwoods or IPE.
Building Materials
Most projects require other building materials, like nails, screws, or tools, to complete.
Labor Costs
If you hire a company or individual to build your patio, you must factor in labor expenses to your total build cost.
Excavating and Prep Work
You may need to do some prep work before your property is ready for a deck or patio installation. Determine what needs to be done before you start building for a better understanding of the costs involved.
Add-on Features
Plan for additional features to enhance or protect your deck or patio, like electrical features, a patio cover, stairs, safety features, walkways, a gazebo or pergola, heaters, a hot tub, bar, or outdoor furniture. Landscape additions can enhance a newly built patio but also increase installation costs.
How to Pay for a Deck or Patio
Saving up cash is a savvy way to pay for a deck or patio without paying extra charges.
If dipping into your savings isn’t an option, several financing options exist that cover home improvement project costs upfront and allow you to pay them back over time.
Financing a deck or patio project gives you quick access to funds to purchase materials and tools for DIY projects or pay contractors.
Many contractors and construction companies require upfront payment of a portion of the build estimate to start the project. Financing your project gives you access to funds to get the project started.
Financing Options for a Deck or Patio
The best financing options depend on project costs, your credit score and history, and other lender requirements. You may qualify for lower interest rates with good-to-excellent credit.
Consider the following financing options if you’re installing a deck or patio soon.
Unsecured Personal Loans
An unsecured personal loan is a personal loan that doesn’t require collateral to obtain.
Unlike a mortgage or auto loan, which use your house or car as collateral, an unsecured personal loan is secured by meeting the lender’s credit and other underwriting standards.
Lenders perform a credit inquiry to determine your creditworthiness, looking at factors such as payment history, debt-to-income ratio, and overall financial situation.
How much you can borrow depends on the lender and whether you meet its qualifications.
Personal Loan Pros & Cons
Who does a personal loan for home improvement work best for?
Personal loans are best for individuals who need access to funds quickly, have a strong credit profile, and can afford monthly loan payments.
Home Equity Loan
A home equity loan is a loan secured by the equity built up in your home.
Often referred to as a second mortgage, a home equity loan provides a lump sum payment paid back over a fixed term.
The amount you can borrow with a home equity loan depends on your home’s current market value and the balance on your home’s mortgage.
Home Equity Loan Pros & Cons
Who does a home equity loan for home improvement work best for?
Home equity loans are best for individuals who use the funds for home improvements to increase their home’s value and can afford monthly loan payments.
Home Equity Line of Credit
A home equity line of credit (HELOC) is another way to tap into your home’s equity.
Instead of receiving a lump sum upfront, a HELOC gives you access to a credit line to use as needed to cover financial needs, including home improvement projects. With a HELOC, you can pull funds from it at any time during the draw period and repay all or a portion of the borrowed amount every month.
Home Equity Line of Credit Pros & Cons
Who does a home equity line of credit work best for?
HELOCs are best for individuals that need funding at different stages of a home improvement project and have good enough credit to qualify for lower interest rates. It’s also a good option for those with equity built up in their home who want to use the funds to increase the value of their home.
Cash-Out Refinancing
Cash-out refinancing works like mortgage refinancing, except you generally refinance your original home mortgage loan into a new, larger loan amount, receiving the difference between the two as a lump sum payment.
You can use the proceeds from a cash-out refinance for whatever reason, including home improvements.
Cash-Out Refinancing Pros & Cons
Who does cash-out refinancing work best for?
Cash-our refinancing is best for individuals who want to tap into their home equity to fund home improvements or other financial needs while potentially qualifying for a lower interest rate.
Credit Card
Credit cards come with a revolving line of credit for purchases. Like a loan, credit cards charge interest, called APR, which is added to your balance if you don’t pay it monthly.
Credit Card Pros & Cons
Who does a credit card work best for?
Credit cards are best for individuals who want to fund home improvement projects and can afford to pay off the balance each month to avoid expensive interest charges.
Construction Company Financing
Construction companies often partner with banks and lenders to provide a direct financing option for customers who want to pay for home improvement projects over time. This type of financing comes as a fixed-rate installment loan, often with promotional 0% interest attached for a predetermined period.
Construction Company Financing Pros & Cons
Who does construction company financing work best for?
Construction company financing works best for individuals who want to finance a home improvement project with no interest payments for up to a year or longer.
Best Unsecured Loans for a Deck or Patio
Most personal loan lenders will let you use your loan for just about anything, including home improvements and renovations. Here are some of the best we found.
Best Egg
Best For: Getting Prequalified
Best Egg gives potential borrowers the opportunity to get prequalified. With prequalification, consumers can find out if they will qualify for a loan and some of the details of the loan they would qualify for including, interest rate, amount, and more.
This lender also has a lower credit threshold than some of the other personal loan home improvement lenders. The minimum credit score to qualify is around 600, so borrowers with fair credit may be able to get qualified. A lower credit score means a higher interest rate in most cases, however.
Learn more about Best Egg loans.
SoFi
Best For: Joint Borrowers
SoFi offers several perks for its most qualified borrowers, including no fees, unemployment protection, financial advising, and a sophisticated app where you can manage your loan.
This loan works well for home improvement needs because loan amounts of up to $100,000 are available to qualified borrowers, and you can take up to seven years to pay it off. With a joint borrower, you may qualify for a larger loan amount or a lower interest rate, which makes it easier to complete your home upgrade with a loan from SoFi.
Learn more about SoFi loans.
Prosper
Best For: Quick Funding
Prosper is known for its quick turnaround time from when you submit your loan application to when you get approved. Like SoFi, it also offers longer payoff times, but loans are much lower and cap out at $40,000.
The interest rate offered by this lender may be higher than some of the other lenders, but you can use a cosigner or joint borrower with a Prosper loan.
Learn more about Prosper loans.
Upgrade
Best For: Less-Than-Perfect Credit
Upgrade caters to consumers looking for a loan to improve their home or pay off high credit card bills. It comes with several perks, including joint borrowers, rate discounts, and longer payoff times for home improvement loans.
Upgrade does charge an origination fee that’s based on your loan amount. Borrowers don’t need excellent credit to qualify for an Upgrade loan.
Learn more about Upgrade loans.
How to Compare Your Options
Compare all available financing options to determine the best course of action to pay for your deck or patio installation.
Here are some factors to consider when comparing your options.
APY
Compare interest rates to see how much borrowing money for your home project will cost. Some lenders allow you to prequalify for financing without affecting your credit. Prequalification allows you to see what interest rates you may qualify for if you apply for financing.
Terms
Determine how much time you need to pay off the amount you plan to borrow. Choosing a shorter term could mean higher monthly payments and vice versa.
Payments
Choose financing that offers a reasonable monthly payment you can comfortably afford.
Fees
Pay attention to any fees charged by the lender for financing, including origination fees, annual fees, prepayment penalties, and late fees.
Getting Qualified
The best financing options may be the ones you qualify for. Check with lenders on requirements and qualifications for borrowers before you apply for financing. Take advantage of prequalifying whenever possible to understand your chances of approval.
Tips for Financing Your Deck or Patio With an Unsecured Loan
Installing a deck or patio can be an expensive process. The tips below can help improve your chances of approval for financing to cover building expenses.
Know Your Credit Score
Check your credit report and score to look for any errors or omissions and better understand where your credit stands when applying for financing.
Have Emergency Savings
Having money set aside for emergencies can protect you if you face unexpected expenses to could cause you to miss loan payments.
Shop Around
Compare multiple lenders to find the best rates and terms to fit your needs.
Only Borrow What You Need
Determine how much you need to fund your project. Avoid borrowing more than you need so you don’t take on extra unneeded debt.
Check Eligibility Criteria
Check with the lender to see what requirements you must meet to qualify for lending products.
Improve Your Credit
Improving your credit score can increase your chances of approval. Build a history of on-time payments while paying down debt and keeping credit balances low to boost your score.
Look Out for Fees
Lenders often charge additional fees when you finance. Ask your lender about any fees attached to your loan or credit card.
Avoid Opening Other Accounts
If you plan to finance soon, avoid opening any other new credit accounts, which can cause changes to your credit score and possibly hurt your chances of approval.
Gather Documentation
Lenders typically ask for personal and financial information during the application process. Determine what you need to provide before you apply to speed up the process.
Bottom Line
If you plan to borrow money to fund home improvements, shop around to compare financing options, lenders, and rates. Prequalify to check potential rates and terms without affecting your credit. Choose the option that fits your needs best.
