Ready for a lawn makeover? Whether you plan to brighten up the area with border flowers or transform your yard into a veggie garden, you might be wondering how to transform your landscaping dreams into a reality. More importantly, you may be wondering how to finance it. Is it a good idea to look into loans for landscaping?
From regrading land to investing in mature plantings, landscaping can be expensive. If you don’t have the cash to pay out-of-pocket, you’re likely on the lookout for a landscaping financing option.
To make the best financial decision for your household, you need to know your financing options for landscaping. In this short guide, we’ll cover the best ways a homeowner can pay to beautify the outdoor area.
The ideal way to pay for anything is with cash. You’re able to avoid:
- Monthly payment or yearly payment
- Hidden fees
- Using your home as collateral
However, landscape financing can be a major expense. If you pay with cash, you may need to limit the scale of your project.
In some cases, beautifying your home is a must before putting it on the housing market. In others, you need to make major changes to fully enjoy your small patch of the great outdoors. A lack of sufficient funds can postpone or derail your landscaping needs—but you may not want to dip into any emergency funds just to cover the cost.
Luckily, you have other home improvement financing options you can use for your landscape project.
2. Credit Cards
If you already have free credit on one or more of your cards, you might feel comfortable making a few charges for landscape design, materials, landscaping equipment, labor, or even professional landscaping services.
Whether this is a good idea depends on several factors:
- The scale of your project
- Your credit history
- Your interest rate
- Your desire to take out additional credit
You may be able to front the costs for a small-scale landscaping project using your credit cards—but consider the interest rate you’ll have to pay.
Wondering if home improvement loans with bad credit are possible? It is, but if you have a low credit score, taking on additional debt might mean high payments and further damage to your score. In turn, this can make it more difficult to take out loans for other financial priorities like education, medical expenses, or the purchase of a new home.
3. Personal Loans
When you need cash in a short amount of time, a personal loan provides an alternative to a credit card. You could potentially use the lump sum to pay for your landscaping project and then repay it in fixed installments as time goes on.
Personal loans for landscaping come in two types:
- Secured – Your assets will be used as collateral against the home improvement loan. These could include your savings account or your car. If you get behind on payments, the lender will seize your collateral and use it to cover the debt.
- Unsecured – This option doesn’t require collateral, but it is a riskier investment for banks/lenders. As a result, your interest rates will likely be higher as compared to a secured loan.
An unsecured landscaping loan may present a more attractive option, but you’ll need to prove your financial worthiness. Depending on the lender, you may have to meet strict qualification requirements.
4. Home Equity Loan
One of the more common types of home improvement loans you can consider is the home equity loan. When you take out a home equity loan to finance your landscaping project, you’ll receive a specific amount of money to spend. This type of loan is often referred to as a “second mortgage” because it functions in a similar way.
In short, a home equity loan is a secured loan that uses your home as collateral. If you fail to make payments, your lender can potentially seize your home as collateral.
While HELOCs come with some potential benefits, including fixed interest rates and deductible interest, this option also involves high closing costs. Of course, you’ll also be taking on additional debt.
5. Home Equity Line of Credit
A HELOC is in some ways similar to a home equity loan—it uses your home as collateral for a loan—but it also functions like a credit card.
A HELOC is broken into two periods:
- Borrowing Period — During this time, you can take out money whenever you need it for up to 10 years, or until you reach your credit limit. You still have monthly minimum repayments. In the meantime, you can use the credit however you want.
- Repayment Period — Once the borrowing period ends, you’ll have to repay the remaining balance plus interest.
Just as with a home equity loan, the downside is the possibility of foreclosure.
Choose an Alternative Solution to Landscaping Loans
Landscaping loans and credit card debt can leave you in a financially precarious situation.
You want to beautify your yard—but it may not be worth significant debt and risk.
If you have a sizable amount of equity, you have other options. A sale-leaseback is a home equity loan alternative. This option doesn’t require taking out a loan or moving out. Instead, it allows you to sell your home, convert your equity into cash and stay as a renter.
You have big plans for your yard. But, you shouldn’t have to risk your financial security to access the equity in your own home. When choosing how to finance landscaping, consider your long-term financial and personal goals.
If you’re beautifying your outdoor area before a sale, a sale-leaseback program can help you convert your equity into cash to fund those improvements—plus your new downpayment. If you’re interested in looking into an alternative sale-leaseback solution, contact an expert to help.
If you’re looking for financing options for your lawn makeover, there are various options for you! If you are still unsure of financing options to pay for your lawn makeover after reading this article, consult a financial advisor to discuss your options.
- Investopedia. When Are Personal Loans a Good Idea? https://www.investopedia.com/personal-loan-5076027
- Bank of America. Home equity loan vs line of credit? Here’s what you need to know. https://www.bankofamerica.com/mortgage/learn/home-equity-loan-vs-line-of-credit/