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Patio Financing

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How much would you like to borrow for upgrading your patio?

by | Jul 12, 2021

Patio Financing

Why get a patio/deck?

If you enjoy spending time outdoors, you need go no further than your own backyard. If you enjoy entertaining you can add plenty of seating, or if you prefer your own company you can create a space that is all your own. There are seemingly endless options when planning a patio/deck.

 

How much does a patio/deck cost?

Patio vs. Deck

While the words patio and deck are often used interchangeably, there are a few important distinctions that you should consider before investing in a patio or deck. First, a patio is built directly onto the ground whereas a deck is built as a raised structure with a support system. A patio is typically built on the ground in the backyard and does not necessarily need to be attached to the house itself.

 

Installation

Deck

Installation of a deck is often more difficult than that of a patio because it requires more structural support. The deck also needs to be attached to your home. It is recommended that you hire a professional if you are planning on adding a deck to your home. A deck is a great choice if you have an uneven or sloping yard, as it can be built on land that is not level.

 

Patio

Patio installation is easier because it is just laid down on flat land, rather than needing the kind of construction that is necessary with decks. The ground will still need to be reinforced, as this will be a high-usage area of the yard.

 

Average Price Per Square Foot

 

Material

Average Price Per Square Foot

Pressure-Treated Wood

$2.35

Cedar

$3.75

Vinyl

$7.50 – $9.50

Redwood

$7.75

Composite

$7.80

Ipe

$12.00

 

The table above is the average price for material alone, not taking into consideration the price of labor. The price of labor can be much harder to estimate with a patio/deck installation because it depends on many factors. The size, material being used, and location of your home all affect the price of labor.

 

Options for Patio/Deck Financing

 

  1. Personal Loan

 A personal loan can be a good option when you are not liquid enough to pay for a project in cash or do not yet have enough equity in your home to leverage for a patio or deck installation. A personal loan is a type of installment loan. This type of loan is typically paid back in 12-84 months so it can offer a lot of flexibility. A personal loan can be a good option for someone with good credit or a good relationship with their bank or credit union. This type of loan does not require that you put anything up as collateral so you do not need to worry about a lien on your home as long as you make your payments. Interest rates for personal loans can be lower than those for credit cards or other types of loans. Interest rates for personal loans can range from 5 to 32 percent depending on credit and loan length, while credit card interest typically averages 18 percent. Generally, the better credit you have the lower the interest rate will be. One thing to keep in mind with personal loans is that the better your credit, the lower your interest rates will be.

Prepayment penalties: Some lenders don’t charge prepayment penalties, meaning you can pay off your loan early and decrease the amount you pay in interest.

 

2. Home Equity Loan

 A home equity loan can be considered a second mortgage. A home equity loan allows you to borrow a lump sum of money using the equity you have built in your home. A typical repayment for a home equity loan is between 5 and 30 years.

You can calculate your home’s “loan to value” ratio by dividing the amount you owe by the value of your home. For example, you owe $150,000 on a home worth $300,000. That’s $150,00/$300,000 = 0.5 or 50 percent loan to value. This means that you have 50% equity in your home. After calculating your home equity, compare it to your lender’s maximum LTV ratio to see if you qualify for a home equity loan. After confirming that you may qualify for a home equity loan you can calculate how much you may borrow by multiplying the value of your home by the maximum LTV of the lender and subtracting your mortgage balance.

 

Pros & Cons

Home equity loans are great for people who want to fund home improvement projects because the interest you pay will be tax deductible if the money is used for renovations, according to BankRate.

 

Home equity loans offer competitive interest rates when compared to other options.

 

Pros

Cons

Low interest rates

Closing costs can be expensive

 

Fixed monthly payments

For those who want to pay it off fast, they have longer funding timeline than personal loans

Interest may be tax deductible

Risk of losing your home if you are unable to make payments

 

Home Equity Loan vs. Home Equity Line of Credit (HELOC)

Both home equity loans and HELOCs are secured against the value of your home equity. However, a home equity loan is a lump sum of money and a HELOC is a revolving line of credit, similar to a credit card.

 

A HELOC may be harder to secure than a personal loan or home equity loan therefore you need good credit and a high LTV ratio.

 

3. Credit Cards

 

Credit cards are always an option for financing home improvement projects. However, credit cards are likely to be the most costly option when financing your patio or deck installation. Moreover, the interest rates will likely be higher with credit cards, making them harder to pay off over time. Credit cards can be obtained regardless of credit issues and therefore can be the most flexible option for a broader range of credit histories.

 

Top reasons to add a patio or deck to your yard

 

  1. Upgrade for Style

A patio or deck will certainly add some life to your yard. Both are good options for sunbathing and relaxing, or entertaining and hosting get-togethers. Both are easy to style to your exact tastes. With a wide variety of material options, you can be sure to make the space perfect for you. You can also add furniture and landscaping that suit your desires.

 

2. Increase home resale value

A new patio or deck is like adding extra space to your home. This can help increase the value of your home at resale. Decks and patios are also eye-catching to prospective buyers.

 

Other Factors to Consider:

Material

Pressure-Treated Wood

Pressure-treated wood is a popular option when building a patio or deck, both for its low cost and because it can last decades if properly maintained. It typically comes in tan and light brown but it can be stained to other colors if you choose. In order to maintain the original look of the wood, it will need to be refinished with a clear sealer or stain every other year.

 

Cedar

Cedar is a good choice if you are looking to lower the cost of labor for a deck or are looking to DIY a patio because it is one of the easier options to work with. It is important that you buy heartwood instead of sapwood, because sapwood tends to rot quicker and will need to be replaced sooner. Cedar will last 15-20 years, if properly maintained. In order to maintain the look of the wood, it will need to be refinished once a year.

 

Vinyl

Vinyl is a good option if you are not looking for a big maintenance job for your patio or deck. Polyvinyl chloride (PVC) has no wood content, therefore does not need to be refinished annually. There are many color options for PVC but it will not look like real wood. Some retailers will offer up to a 25 year warranty for PVC.

 

Redwood

Redwood is exclusive, as it is currently only readily available on the West Coast. Redwood is another good option if you are looking to DIY a patio or reduce the cost of labor on a deck. Also like cedar, it is important you purchase mainly heartwood, with very little sapwood. Redwood can last 15 to 20 years, if properly maintained.

 

Composite

Composite material is made from wood fiber combined with recycled polyethylene, and is another good option for a low-maintenance deck or patio. Composites are good if you want the real wood look without the real wood maintenance. Composites come in a variety of colors and styles so you have a lot of choice in the look of your deck or patio. Composites can last upwards of 25 years, if properly maintained. Composites must be cleaned with a deck wash every three to four years to avoid molding.

 

Ipe

Ipe is going to be the most expensive option for both materials and labor. Ipe is harder to work with than other materials which is going to increase the cost of labor and make it harder to DIY. However, the benefits may outweigh the cost. Ipe is a gorgeous hardwood that is naturally rot-resistant and very durable. It must be refinished with a seal every year but, if properly maintained, can last upwards of 25 years.

 

Functionality

Climate

Depending on the climate where you live, you might need some extras to make sure your patio or deck is comfortable for your family. If you live in a humid climate you might want glass or vinyl walls encasing your patio. If you live in a more rainy climate, you might want a retractable roof over your deck. Whatever the case may be, these extras will add to the overall cost of your patio or deck.

 

Space

Adding a deck or patio to your yard will add another “room” to your house without going through the hassle of a complete add-on. A deck/patio can be used as an outdoor living room, reading room, party room or whatever else you would like it to be. There are many options for what to do with your outdoor deck/patio, you will easily find something that works for the whole family.

 

Would a new patio/deck increase the value of your home?

 

Average ROI for new patio or deck

The average return on investment for an outdoor patio or deck is around 80%. For example, if you spend $10,000 on a deck installation, you can expect to recoup about $8,000 at resale.

 

What type of patio/deck offers the best resale value?

Real wood offers the best resale value compared to other materials. A real-wood deck or patio can recoup up to 100% of its value at resale. A deck or patio made of composite material will recoup 60-68% at resale.

Your location will also affect the resale value of your deck/patio. A deck/patio that sees sun year-round will likely receive a higher ROI than one that sees many snowy months.

 

Conclusion

Is it really worth it?

If you are on the fence about whether or not you should add a patio or deck to your yard, this is your sign to go for it. A patio or deck is a great addition to a home with a family or a home that enjoys entertaining. A patio/deck will surely increase the resale value of your home. It increases curb appeal which will attract prospective buyers.

 

References

https://www.fixr.com/comparisons/patio-vs-deck

https://www.driscollcontracting.com/4-reasons-you-should-add-a-deck-to-your-home

https://www.remodelingcalculator.org/building-new-deck-return-investment/

 

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