By Sabrina Karl
A recent survey asked U.S. homeowners if they plan to renovate their home in the next five years. About 7 in 10 said they would. The more interesting facet, though, is that this was a survey of homeowners who are carrying $10,000 or more in unsecured debt.
Mortgages and car loans are secured debt, so someone with unsecured debt means they owe on credit cards, student loans, personal loans, or other debts that don’t involve collateral, like a house, car, or boat.
Still, among the 1,028 indebted homeowners surveyed, 69 percent said they plan to renovate in the next five years. And almost half (48 percent) expect to spend more than $15,000. About a quarter (26 percent) project to spend upwards of $25,000.
How do they plan to pay for the renovations? Although 58 percent said they had cash savings to contribute, roughly a quarter of respondents said they would tap a home equity loan (29 percent), a credit card (28 percent), and/or a personal loan (24 percent). Since many respondents reported using multiple methods to foot the bill, percentages sum to more than 100 percent.
Across generations, millennial homeowners were the most likely to take on additional unsecured debt to fund their home improvement project, with 36 percent reporting they would use credit cards and 31 percent saying they’d take out a personal loan.
Generation X and baby boomer homeowners leaned more heavily towards home equity loans, at 28 percent and 25 percent, respectively. For Gen X, only 21 percent said they would use cards and 20 percent, a personal loan. Among boomers, 23 percent planned to use a credit card and just 13 percent, a personal loan.
The online survey was conducted for Freedom Debt Relief by Atomik Research between July 3 and 14, 2019.