Planning and Financing a Bathroom Remodel 

Key takeaways: 

• A bathroom remodel can increase the comfort and functionality of your home. 
• Take time to plan your project based on your household’s needs, your design and material preferences, and budget. 
• Several options are available to help finance bathroom remodels. Home equity can be a good source of funds, through loans or a home equity agreement. 

Bathroom remodels consistently rank as some of the most popular home improvement projects. Whether it’s a simple cosmetic update or a transformation into an at-home spa, an updated bathroom can offer greater comfort, functionality, and relaxation. And as more homeowners look to age in place, bathroom updates to accommodate that goal are becoming more common. 

These remodeling projects can be time-consuming and expensive, so it pays – literally – to think carefully about your goals and plans, research costs, and evaluate how you’ll budget and pay before you dive in. 

Consider the end user

Who’s going to be using the bathroom – or bathrooms – you are thinking of remodeling? If it’s children, that might mean incorporating shorter counter heights and smaller toilets. If it’s more than one person, would dual sinks be helpful? If it’s for an elderly parent with mobility issues, what about wheelchair accessibility? 

Also consider if the bathroom’s use might shift in the future. Consider how soon the kids will grow up or move out, for example. If you’re adding a first-floor bathroom, you may want a soaking tub now, but what about down the line? Would an easy-to-maintain, stylish walk-in shower be a better long-term option? 

Choose your design, material and fixtures

You may need help from a designer, or you may be able to narrow down your options by visiting home improvement and specialty retailers and spending some time researching online.  

Almost all bathroom remodels involve new flooring. To keep it waterproof – a must in a bathroom – opt for tile or waterproof vinyl plank. The latter, which is available in a wide variety of colors and styles, will be warmer on your feet, though some homeowners who prefer tile also install underfloor radiant heating. Also keep in mind that vinyl plank is very easy to change if you ever decide on a different style; tile is more difficult and time-consuming. 

You’ll need to decide on shower or tub design, and the materials you’ll have around them. If you want a walk-in shower, discuss first with a contractor to make sure there are no prohibitive plumbing or structural issues. For the surrounding materials, know that fiberglass panels are waterproof, and often come with molded shelves, soap dishes, and grab bars. If you choose tile and have budget considerations, keep in mind that larger tiles are usually significantly less expensive to install.  

When it comes to fixtures, you’ll need to decide not only on faucet style, but if you want the shower and sink faucets to match, or if you’re looking for a special showerhead with multiple heads. Sink and vanity choices abound. Consider your storage needs as well as style preferences. Pedestal sinks, for example, may be popular, but lack storage. If you’re thinking of future maintenance considerations, the plumbing on them is a little trickier as well. 

Time your bathroom remodels

Often, homeowners who have multiple bathrooms want to update all of them. While it may be tempting to start in on all of them at the same time, make sure the work is staggered so that you always have a working shower and/or tub, sink and toilet. Deciding whether to update one or more bathrooms at a time also will depend in large part on your budget. If you use the same materials in all of them, you could realize some savings with volume discounts, but they will usually be modest. 

Financing home renovations

Funding your bathroom renovation starts with budgeting. If your updates are minor and/or you are confident you have the skills and time to tackle them, you may decide to do it yourself. Alternatively, you may need to find and work with a contractor. Sometimes, it’s possible for homeowners to do some of the work themselves and leave some to a professional.  

Ideally, you’ll be able to save up on a regular basis to pay for your project. If not, there are several funding options to consider. 

1. Personal loan for home improvement. Personal loans are often used to pay for home improvements.  Offered by banks, credit unions and independent lenders, these loans are usually available for amounts of up to $50,000, although some have higher limits. Repayment of principal and interest is over a set period, usually between 24 and 60 months. They also typically include origination fees (usually 2%-7% of the amount borrowed), and there may be late fees and prepayment fees as well. Lenders vary widely in fees and terms.  Your credit profile will help determine whether you qualify for a personal loan and the rate you’ll receive. Lenders also look at you debt-to-income ratio. 
2. Home equity loan (HEL) or home equity line of credit (HELOC). Using home equity to fund your bathroom remodel can be a good option for many homeowners. An HEL provides the total loan amount up front. A fixed interest rate ensures that neither the rate nor monthly payment will change over the life of the loan. With a HELOC, you can draw money as you need it, up to the limit extended to you. Interest is typically variable, although some fixed-rate HELOCs are available. You’ll pay interest on the amount you draw.  
   Lenders offering these types of loans will qualify you based on your credit score, debt-to-income ratio, your home’s loan-to-value ratio and whether you have stable income. They use your home as collateral, so if you miss payments, you risk foreclosure and losing your home. 
3. Home equity agreement (HEA). Unlike loans,  HEAs enable you to access your home equity without having to make monthly payments or deal with interest charges. Instead, you’ll receive cash up front in exchange for a portion of the future value of your home. Eligibility requirements for an HEA are more flexible than loan options. For example, you may qualify with a credit score of 500 and you don’t need to provide proof of income. You buy out the provider of your HEA when you sell your home or anytime during your term, with terms ranging from 10 to 30 years.  
4. Home remodel loan. Some lenders may market home remodel loans, also known as home renovation loans, or home improvement loans. These are generally just personal loans. Larger contracting businesses that offer these loans usually are working with lenders that offer personal loans; the business maintains a relationship with the lender to refer customers. Borrowers still must qualify as they would with a personal loan, as explained above.  
5. Home improvement credit card. While marketed for “home improvements,” these cards are generally just credit cards that may offer cash-back rewards or introductory periods with 0% interest on a balance carried. Cards offered directly by home improvement retailers may offer special financing promotions, a longer return period or, sometimes, a small discount on purchases for a limited time. It’s very important to weigh the benefits of another credit card with the risks, which can include much higher interest rates after the introductory period and the potential for overspending. Every situation is different, but it’s often best to use an “all-purpose” cash-back rewards card, and only charge what you can pay in full when the bill arrives. 
6. Cash-out refinance.  In a cash-out refinance, you’ll take out a whole new mortgage, but for a larger amount than what you owe on your home. Then, you pay off your existing mortgage and keep the difference in cash.  To qualify, most lenders require a credit score of 620 or higher, DTI of 43% or less, and verified income. Higher interest rates make this option less attractive, especially for homeowner who are locked into low-interest rate mortgages.  
    
    

Get started

Whether you are painting cabinets and updating hardware or adding a new powder room, giving your bathroom an upgrade can improve your home and your life. Be sure to take time to research costs, budget carefully and evaluate your financing options. If using your home equity without adding monthly payments is of interest, Unlock’s HEA might be worth exploring.