Building an Accessory Dwelling Unit (ADU) is a great opportunity to increase property value, generate rental income or expand your living space. But how do you find the right financing option?
Fortunately, there are several convenient options available, and each has its own benefits. Let's break down the most popular ADU financing options and help you choose the best one.
HELOC - Home Equity Line of Credit
A HELOC (Home Equity Line of Credit) is a flexible option where you borrow money against your home and use it as needed.
Interest is charged only on the amount used
Interest rate is lower than personal loans
Flexible repayment terms
Who it suits: Property owners with accumulated equity who need flexibility and low interest rates.
What is important to consider: The house remains as collateral, so it is important to make payments on time.
ADU-specific loans
Some banks offer special loans designed specifically for ADU construction.
Lower rates than conventional loans
Longer repayment terms - lower monthly payments
All costs from design to construction can be covered.
Who's eligible: Those who want a fast and cost-effective loan specifically designed for ADUs.
What's important to consider: Loan terms can vary, so it pays to choose a reliable lender.
Cash-out refinancing
You can replace your current mortgage with a new, larger one and use the difference to build an ADU.
You can lower your interest rate
One monthly payment instead of several
Minimal additional costs
Who Eligible: Property owners with significant equity who want to combine a mortgage and ADU financing.
What's important to consider: Refinancing extends the term of the mortgage, so it's important to consider the long-term costs.
Personal Loans
If you don't want to use your home as collateral, you can get a personal loan.
Fast approval
Can be spent on any need - materials, labor, unexpected expenses
No collateral required
Who it suits: Those who want to get money fast without being tied to real estate.
What's important to consider: Higher interest rates and a shorter repayment term, which can mean higher monthly payments.
How we can help you with financing
At EG Modern Construction, we know that finding the right financing is one of the biggest challenges when building an ADU. We can help you:
Sort out your financing options
Select the best loan for your situation
Organize the process so it's quick and stress-free
Want to know which option is right for you? Contact us - let's find the best solution together!