The maths, with your numbers
What paying extra would do
Every dollar above the payment comes straight off the balance, so the interest stops being charged on it. These are worked out from the loan above.
How the balance falls
The same loan over different terms
| Term | Payment | Total interest | Total repaid |
|---|
A longer term lowers the payment and raises the interest. Your loan is highlighted.
Amortization schedule
Where each payment goes, from the first to the last.
There are four normal ways to pay for building work, and the cheapest one depends on whether you are willing to put the house behind the debt.
The four options
| Option | How it works | The catch |
|---|---|---|
| Home equity loan | A lump sum secured on the house, repaid over a fixed term | Your home is the collateral |
| HELOC | A credit line you draw on as the work proceeds | Variable rate, and again secured on the house |
| Cash-out refinance | A new, larger first mortgage | You re-price the whole mortgage, which is painful if your current rate is low |
| Personal loan | Unsecured, fixed rate, fast | Higher rate, smaller amounts |
The CFPB puts the trade-off simply: a personal line of credit lets you borrow based on your credit rather than using your home as collateral, usually with a lower limit and a higher rate. Secured borrowing is cheaper because the lender can take the house.
On a cash-out refinance
The CFPB's advice is to look hard at the rate, especially if it is higher than the rate on your current mortgage. Refinancing $300,000 at a higher rate to release $40,000 is an expensive way to buy a kitchen.
PACE financing deserves a warning
Residential PACE loans pay for energy improvements and are repaid through your property tax bill. From 1 March 2026 they are covered by federal ability-to-repay rules under a CFPB rule, after years of complaints about sales practices. If someone is offering PACE at the door, get the terms in writing and compare them with an ordinary loan.
Budget for the overrun
Borrow for the quote, then decide what you would do if the work costs 15% more, because it often does. A HELOC handles that better than a fixed lump sum; a personal loan does not.
Quick answers
What is the payment on a $35,000 home improvement loan?
At 11% over seven years it is about $600 a month. A secured home equity loan at a lower rate would cost less each month but puts the house at risk.
Is a personal loan or a HELOC better for renovations?
A HELOC is cheaper and flexible but secured on your home. A personal loan costs more and is unsecured. The CFPB frames it as borrowing against your credit rather than your house.
Should I do a cash-out refinance instead?
Only if the new rate is close to your current one. Re-pricing an entire mortgage to release a small sum is expensive.
What is PACE financing?
A loan for energy improvements repaid through your property tax bill. From March 2026 it is covered by federal ability-to-repay rules; compare it with an ordinary loan before signing.
Sources
- CFPB, home equity loans, HELOCs, cash-out refinancing and personal lines of credit
- CFPB, What You Should Know About Home Equity Lines of Credit
- CFPB final rule on residential PACE financing, effective 1 March 2026