Going outdoors is all about bringing the creature comforts of a home outside. According to CNN Money, the outdoor living market is a growing $5+ billion industry. Warming outdoor spaces with lighting products, fire pits, and fireplaces are growing right along with the outdoor living trend.
Outdoor fireplaces are especially popular because they bring a living room feel to even the smallest of outdoor spaces. Outdoor fireplaces can range from small, fire-pit-like contraptions to huge, magnanimous edifices. According to the home improvement website, ImproveNet, the average cost to install an outdoor fireplace ranges from $1,500 for pre-fab installations to up to $8,000 using custom or high-end materials.
Unfortunately, some of the more accessible home-improvement loans like the Fannie Mae Homestyle Renovation Mortgage or the FHA 203(k) rehab loan will not cover cosmetic upgrades like an outdoor fireplace.
An outdoor fireplace can also add value to your home. However, the initial investment is substantial. If you don’t have the cash you can use personal loans, HELOCs, or credit cards to pay for it.
The good news is that there are many options for financing available. So, if you’re wondering how you can afford this home upgrade without cash on hand, consider these five financing options.
1. Marketplace lending
Peer to peer lending in an option for people with all kinds of creditworthiness. Even if you’ve got a lower credit score, you could still find a loan (though your interest rate will be higher). Companies like Lending Club and Prosper aggregate many lenders (many of which are individuals and not institutions) who have placed money into a pool to be used to offer loans to individuals.
2. Unsecured loans
Also known as a personal loan, these loans are issued by banks and usually require a good credit score. In addition, these loans will be looking at your income, debt-to-income ratio, and liquid assets. Because these loans don’t require any collateral, they are underwritten with extreme care and extended to those who present the least credit risk.
3. Contractor financing
If your project is large enough, sometimes your contractor will offer financing for both labor and materials. They’ll usually partner with a company that handles all the terms and processing so that they can focus on your project. Many times, your contractor can even offer specials on financing.
You may be able to put little to no money down and get a 0% APR for the first six to 12 months of your loan. The terms on these loans can be similar to credit cards or even slightly more expensive, so you’ll want to be aware of the APR on your loan.
4. Home equity loan or line of credit
If you’ve got some equity in your home or any property, then you could take out either a home equity loan (HEL) or a home equity line of credit (HELOC). Both of these loan products require you to put up a piece of property for collateral. There could be fees for closing that include an appraisal or other general costs associated with processing your loan request.
A HEL is a second loan in addition to your original home mortgage. The difference is that it’s usually for a smaller amount with a higher interest rate. With a HEL, you’ll get the funds in a lump-sum amount which you’ll repay over a fixed period.
The HELOC, on the other hand, is much like a credit card. You only make payments and pay interest on the amount of money you are using at the time. You should also know that the interest rate is variable on this type of loan.
5. 0% APR credit card financing
You can use a credit card to finance your outdoor fireplace, as well. With this approach, you’ll want to make sure your contractor can process your credit card for the labor portion. Then, you’ll purchase materials with your credit card. Buying your own materials could cause also save money.
Another thing you could do is use a credit card with a 0% APR introductory rate. This would give you time before interest kicks in on your fireplace installation and potentially save you more money. (Be sure to pay the entire bill before the interest kicks in!)
Outdoor fireplace financing: The Takeaway
Once you settle on your method of financing, make sure you’re getting the best deals on materials and labor. Once you settle on a design option, you’ll want to get a few bids to make sure your hard-earned money goes far. Ask for references from your selected contractor to make sure they have a record of completing similar projects on time and within budget.
If you decide that a personal loan is the route you want to take, use SuperMoney’s loan offer engine to find the best options for your situation. Then, head on over to our reviews page to compare rates from all the top lenders.