Basement Remodel Financing

How much does it cost to renovate a 1000 sq ft basement?

Final figures for a basement remodel will depend to a large extent on fit and finish and your contractor’s rate. Upscale fixtures and fittings are always going to cost way more than the budget versions. To give a ballpark figure, costs per square foot range from $7 to $23 with a 1000 sq ft basement coming in at between $7,000 and $23,000.

You can expect labor costs to take about a quarter of the total, but many contractors build that into the total cost rather than charging an hourly rate. When considering such a project, make sure you get at least three estimates from reliable contractors and choose the one that offers the best quality work at the right price.

Is finishing a basement a good investment?

Remodeling Magazine has been gathering data on common home improvement projects for 20 years and in that time the figures have remained remarkably steady for basement remodeling. Their stats show a midrange basement refinish will add about $700 for every $1000 that you spend.

As well as adding value, a basement remodel will add functionality and facilities to your home that you can enjoy and will prove attractive to potential buyers in the future. So while spending, say, $20,000 might only add $14,000 onto the value of your property, it may mean that when you want to sell it, you find a buyer very quickly.

What is the best way to finance a basement remodel?

• Savings and investments - Any sort of loan will cost you money, so using savings and/or easily liquidated investments will be the cheapest way to finance a basement remodel. But many people haven’t got that level of savings or may not want to empty the pot to provide the cash needed for a basement project.
• A personal loan - The commonest way of financing a basement makeover, particularly if you have good credit, is with a personal loan. The lender agrees to give you a lump sum which you pay back, plus interest, regularly over the term of the loan, usually 2-5 years though it may be more. This form of finance is simple to apply for and often offers low interest rates and a generous term. Bear in mind that if you have a low credit score the choice of lenders will be restricted and the interest rates are likely to be high.
• A credit card - Though it is unlikely that a credit card limit could pay for an entire project it could certainly be used to offset a large part of the costs. Credit cards generally don’t have low APRs, but if you can qualify for one that offers a low percentage, sometimes down to 0% for an introductory period, then you are effectively getting free finance. Remember that any outstanding amount will attract the normal APR after the introductory period ends.
• HELOC - A home equity line of credit operates a lot like a credit card with the HELOC provider giving you a line of credit from which you draw as needed. Typically, the interest rates are low and the credit limits high, making a HELOC an attractive option for a basement remodel. And the downside? Your house is collateral for the loan so, should you default on repayments, the HELOC provider could take your home.
• A home equity loan - A home equity loan is basically a second mortgage and allows you to borrow against the equity you have in your property. The lender provides you with a lump sum which you repay, usually over a period of 5-30 years, often with a fixed interest rate. While the terms are generous, you do risk foreclosure if your repayments fall into arrears.

Do contractors offer financing?

Some contractors do offer finance packages, usually in partnership with a third-party lender. Loans provided in this way are typically fairly short-term – 12-18 months – but may be medium or even long-term. If your contractor offers financing, make sure you compare what they’re offering with other personal loans to check you’re getting a good deal.

What are the pros and cons of basement remodel financing?

PROS

• Adds value to your home – You may not get dollar for dollar but a basement refurb will raise the value of your home on the real estate market, especially if your house then has more space than most others in your neighborhood.
• Practicality – A fully-functioning basement will improve your home and financing can make that happen now rather than at some indeterminate time in the future when you have saved enough money.
• Have more living space without moving – Many of us are happy where we live but simply need more space as our family grows. Basement remodel financing allows remodeling as a remedy to that problem without having to relocate.

CONS

• Finance costs money and repayments are another drain on your monthly budget.
• If the housing market changes you may not get a good return on your investment.
• To secure the finance may require you to use your home, or the equity you have in your home, as collateral.

What credit score do you need for basement remodel financing?

For a personal loan or HELOC, you likely need a credit score of no less than 580 with 660 or more being preferable. The higher your credit, the easier it will be to get finance with lower interest rates and longer terms.

Can you get basement remodel financing with bad credit?

With lower credit scores, it is still possible to find finance for your basement project, but not only will a loan be harder to come by, but will almost inevitably come at a much higher cost.

Basement Remodel Financing Calculator

If basement remodeling sounds like it might be for you, find out just how affordable finance can be with our calculator:

Compare and apply

Basement remodeling can transform your home and give you the extra space you need. To secure the finance you want, get an estimate for the project, and then it’s time to compare rates. We’ve rounded up a list of the best basement remodeling loans and organized them in our tables so you can easily compare and find the one you’re ready to apply for. The application process is usually quick and easy and you will soon have the cash in your account to go ahead with your basement remodel project.