Finance your Landscape Project

While landscaping is unlikely to create a dollar for dollar increase in your home's value, not landscaping is almost certain to lower the value and make it harder to sell. Before taking on a loan, though, make sure you've explored all your options.

Incorporate costs into the mortgage

If you’re still negotiating your mortgage, you’re in luck. The most hassle-free and least expensive situation is to factor in the cost of landscaping into your mortgage. For example, a year's interest on $10,000 added to the mortgage loan at 7 percent is $700. The closing costs on the home equity loan, including the appraisal expense, could easily amount to more than that.

Home improvement or home equity loan

A home improvement loan can provide a tax deductible way to improve your property. These are amortized, usually fixed-rate loans placed in second position on the title of your home. The money is disbursed to you in one lump sum. Lenders often figure the credit limit on a home equity line by taking a percentage (say, 75 percent) of the home's appraised value and subtracting from any liens against the property (for example, the balance owed on the existing mortgage). Typically, borrowers can receive from $1,000 to $150,000 with terms ranging from 3-15 years. For smaller loans, you may be able to borrow up to 100% of the value of your home, minus any liens. The interest is often tax deductible, but consult your tax advisor for specifics.

Home equity line of credit

Another option is a line of credit on your home, which is based on a variable rate, and offers you the ability to draw money for making improvements only as you need it. A home equity line of credit is a form of revolving credit in which your home serves as collateral. Many home equity plans set a fixed period during which you can borrow money, such as 10 years. At the end of this "draw period," you may be allowed to renew the credit line. Some plans may require you to borrow a minimum amount (usually a few hundred dollars) each time you draw on the line and to keep a minimum amount outstanding. Although the rate on a credit line is usually low – those with good credit can get the prime rate charge their best customers – this type of credit can end up being more expensive because interest is compounded monthly rather than annually.

Personal loans

If you’re looking to finance a smaller landscaping project a personal loan may be the most efficient solution. These will get your lower rates than a credit card. Decide on the least amount that will get you through? Instead, their first stop might be a payday lender, where the rates are high, try your credit union first, where the rates and terms are more favorable, and then your bank. Terms on two-year bank personal loans are averaging above 11.8 percent. Most credit unions offer short-term unsecured loans and many offer loans of less than $500, often with just a quick credit check. Before you borrow, consider the total cost of the credit, not just the monthly payments. Be on the lookout for hidden charges like credit insurance or buying clubs. Instead, opt for a specific loan amount with fixed monthly payments and a finite repayment schedule.

Step by step

Nothing says you have to redesign your landscape all in one season, or even in on year. If you can dedicate a set amount of your monthly income to landscaping, not only will you save yourself the fees and interest of a loan, but you can also take advantage of season-end sales that occur throughout the year. For smaller landscaping projects, this may be the best way to go. Many garden centers also offer instalment payment and lay-away options that can help you stay within budget.

However you plan to finance your landscape, whether through a home equity loan or by picking up plants and garden features as your budget allows, by knowing what you want and the financing options available to you, you'll be able to create the perfect landscape on any budget.