Are you looking to build a new garage, but aren’t sure how to pay for it? Whether this garage is meant to house your favorite toys or to accommodate lawn equipment and your personal vehicles, paying for a new garage with credit is common.
There are several different options you can look into to pay for this new garage. Paying for your new garage using credit is a path you might consider when looking at your financial situation.
Continue reading this article for everything you need to know about paying for a new garage using credit.
Using Credit to Build Your New Garage
Garages, whether they’re attached to your home or detached, are a great way to keep your vehicles or other equipment safe, add storage in your home or give you a space to work on your home projects. However, if you aren’t sure how you can come up with the money to build, using credit could be for you.
A line of credit might be just what you need to get you the garage you’ve been dreaming of. Like a credit card, a home equity line of credit will give you access to a certain amount of money you can use as you see fit. Once you start using it, you’ll have to repay it monthly, but when you start to make those payments, you can access the money again.
You’re able to borrow as much or little of the set limit at a time as you choose. The limit of your credit is determined by the lender at the time of closing. Typically, with a home equity line of credit, you can borrow up to 85% of the value of your home, but you’ll have to subtract the amount you owe on a mortgage.
In order to qualify for a home equity line of credit, you’ll have to owe less on your home than what it is worth, or simply put have equity. The lender will also take your credit score, income, employment history and debt into consideration before you’ll be approved.
These loans tend to have variable interest rates, but there are some lenders who offer fixed rates for a set amount of years. They also have few, if any, closing costs that you might find with a home equity loan. Home equity loans will be a one-time lump sum payment borrowed against the equity in your home.
With a home equity line of credit, you’re borrowing against the equity that is available in your home. This means your home is used as collateral for this loan. If you can’t make the payments on the line of credit, you will be at risk to lose your home. Before you pursue this route, make sure the extra monthly payments you will be required to make, fit in with your budget.
Alternatives to Using Credit and Still Getting Your Garage
Maybe paying for your new garage using credit isn’t for you. There are other options to achieving your goals.
Building up your savings and paying for the garage directly is one option. This will keep you out of debt and eliminate interest. The main downside is the length of time it might take you to build up enough money to pay for the garage of your dreams upfront. Not everyone has that much extra income they can put towards a building project in a short period of time.
In addition to credit, you might look into a loan to cover the costs of your new garage. A loan will give you a chunk of money up front to build an attached or detached garage. You can look into a personal loan or a home equity loan. There are other loan options available. Do your research to find the best option to fit your finances.
Should You Borrow for A Garage?
If you’re in dire need of a garage right now, borrowing to pay for it can be right for you. Be sure to borrow responsibly and understand how those additional payments will fit in your monthly budget.
Shop around and carefully choose the best option for you and try to keep costs of your project low. Remember you will be paying interest, so that will drive up the cost of the overall project.
It’s OK to Pay for a New Garage Using Credit
A garage is a great space to add on to your home. If you need the extra storage space, want to keep your vehicles protected from the elements or if you just want a space to work on your projects and tinker, a detached garage will provide you with the space. Paying for it can be a challenge but doing it on credit and using a home equity line of credit can get you to your goals faster and with ease.
Check with your local bank or financial institution for the latest rates and more information on using the equity in your home to borrow for a home equity line of credit.