How to finance a new kitchen: what are the options?

a piggy bank on a table

So you’ve decided you want a new kitchen – and you’re excited, right? I’d say a new kitchen is probably the most thrilling home transformation, closely followed by a luxurious new bathroom. But the next question is: how to finance a new kitchen?

Setting a budget often seems like a daunting task. But when it comes to planning a renovation, learning how to finance a new kitchen is essential. It’s quite literally the step you can’t afford to miss out.

Of course, you should consider what you can really afford to spend. Then research costs of similar projects, get an idea of how much the things you want cost, and get a few quotes in to compare.

You should also think about the value of your home. If you want to sell up in the future, it’s wise to not spend more than what you may make back. Ask estate agents for a ceiling value (the most your home could be worth even once a renovation has completed).

How to finance a new kitchen

Then, decide how you’ll finance your new kitchen. As with any big investment, carefully consider your personal circumstances and what works best for you (and your bank account). Below, I’ve listed the four main ways in which you can finance your new kitchen as a useful starting point to your research.

Disclaimer: While all effort has been made to offer accurate information in this article, you should always seek the advice of a financial expert before taking any action.

How to finance a new kitchen
How to finance a new kitchen: you’ll need a bigger piggy bank than this. Photography: iStock.

How to finance a new kitchen

It’s always best to spend money you already have saved rather than take on more debt. So if you have substantial savings that can go towards financing your new kitchen, consider using them. You may want to only use part of your savings to put towards the renovation. If that’s the case, you’ll still be reducing the overall debt compared to taking on a finance deal to cover the cost.

Using cash savings may mean your project could take longer as you save up for the next stage or next purchase. But you’ll avoid interest payments associated with loans or finance deals.
If you have equity in your property, you can often remortgage to release the equity (or some of it) to finance your new kitchen. Speak to your mortgage provider or financial advisor to discuss whether this is an option that would work for you. Bear in mind that this may affect your mortgage payments and interest rates, plus the length of your mortgage agreement.

How to finance a new kitchen

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Profits from a house sale
If you have recently bought your property after selling another and you’ve made a profit, you can use this money to finance your new kitchen. Make sure to check how much money it’s worth ploughing into your new home to recoup value up to the ceiling price. Of course, if this is your forever home, this may not be a factor for you.
Home improvement loans are available from banks and building societies and can offer a good way to finance your new kitchen. Many home improvement loans are unsecured, meaning the loan is not attached to your assets should you default on payments.

But you’re unlikely to get a loan unless you have a good credit score. These types of loans often have high interest rates and strict payment schedules for money instalments. Speak to your bank to find out more.

A secured loan may be another option, but bear in mind this will be attached to your assets. Usually, a secured loan has a lower interest rate.

How to finance a new kitchen

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Finance scheme
Many kitchen retailers offer finance schemes whereby you’ll pay a deposit and enter into a payment plan spanning many months or even years. Each will differ depending on the retailer, so it’s best to check which deals are available to you. In order to qualify, you’ll need to pass credit checks to ensure you can keep up with payments.
Credit card
If you’re buying things such as appliances or finishing touches, paying for goods using a credit card means you get protection under Section 75. This means if you buy anything that costs more £100, your purchase will be protected free of charge by your credit card provider. This covers you should anything go wrong.

You’ll have to have a good credit score to be able to get a credit card. Plus, make sure to check terms and interest levels. Any cards offered with a 0% interest will have strict payment date terms and if you miss the deadline for payment, the offer period will immediately end. In short, read the small print and fully understand the terms before committing to a credit card.

Featured image: iStock.

So, now you know how to finance a new kitchen, find out about setting a renovation budget.

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