A new survey from Freedom Debt Relief reveals that 69% of homeowners with $10,000 in unsecured debt plan on renovating their homes in the next five years.
Additionally, 60% of homeowners said they are unable to afford needed upgrades and are willing to go deeper into debt to fund the renovations.
The survey states that 73% of homeowners planning renovations will finance the project with a debt-based financial product. Twenty-seven percent plan on paying in cash.
Of those planning to renovate, 26% said they plan on spending more than $25,000 on renovations over the next five years. An additional 25% will spend between $5,000 and $10,000. Thirty-two percent of millennials plan to spend more than $25,000 on renovations, while Generation X homeowners plan on spending between $5,000 and $10,000.
Payment options for these renovations vary, but 58% plan on using cash or savings to pay for projects. Also, 29% plan on using a Home Equity Loan, 28% plan on using a credit card, and 36% of millennials plan on using a credit card to fund their projects.
While homeowners are willing to go further into debt to renovate their home, J.P. Morgan Chase reported that student debt, which has double to $1.5 trillion over the past decade, is the fastest growing household debt.
“Although the financial returns from a higher education degree over a lifetime typically exceed the costs, roughly 22% of student loan borrowers are in default,” the report said. “As a result, some have framed the ‘student loan crisis’ as a crisis of student loan repayment rather than student loan debt.”
Among the findings by J.P. Morgan Chase was that the average family pays a median of $179 per month in loans of take-home income in months with positive payments. Nearly a quarter of families spend more than 11% of their income on student loans.
The study revealed that 44% of homebuyers who earn less than $50,000 annually make positive payments to their loan. That number increases to 52% for those earning between $50,000-$1000, and 63% for borrowers who make more than $100,000.