Nearly two-thirds of homeowners who have $10,000 or more of unsecured debt say they are planning on doing renovations to their home in the next five years, according to a survey from Freedom Debt Relief.
The report, which is based an online survey of 1,028 homeowners with at least $10,000 in unsecured debt in the U.S., shows that approximately 69% of homeowners with $10,000 in debt plant to take on a renovation project in the next few years.
Despite those plans, approximately 60% of homeowners say they can't afford the necessary renovations to their home, but are willing to go even more into debt to make it happen.
"The survey shows that homeowners who are carrying credit card and other types of debt – including student loan debt – in addition to their mortgage are more likely to finance their home renovations with a home equity loan, credit card or personal loan," Michael Micheletti, director of corporate communications for Freedom Debt Relief said.
Overall, 73% of homeowners said they will be fully financing their renovation project by taking on more debt, while 27% say they plan to pay with cash.
Of those who plan to take on debt to pay for their renovations, 40% plan on using a home equity loan, 38% plan on using a credit card, 32% plan on using a personal loan, and 26% plan on using a home equity line of credit.
Of those that plan to renovate, 26% plan on spending more than $25,000 on renovations in the next five years. Beyond that, another 25% plan on spending between $5,001 and $10,000.
Broken down by age range, 32% of Millennials plan on spending over $25,000, while most of those in Generation X plan on spending between $5,001 and $10,000.
"Homeowners would be wise to save as much as possible, and look at their overall financial position before taking on even more debt – debt that could disrupt their bigger financial picture,” Micheletti said.