November 12, 2018
The demand for home renovations has risen due to limited options available to home buyers in recent years. A stubborn housing supply shortage and related inflation of home prices, along with higher mortgage interest costs caused by Federal Reserve policies, have frustrated many potential buyers seeking to buy their first home or trade up to a better one.
More homeowners than ever before are undertaking renovations to fit their needs and preferences. A 2018 study by Home Advisor found that 80% of current homeowners plan to stay in their current home, and about half plan to remodel to make their home more livable [1].
Overcoming Obstacles for Contractors
The home renovation trend provides major opportunities for contractors. But many home improvement professionals are hampered by the limitations of traditional financing vehicles. Relying on the homeowner to apply for and receive approval of a bank home equity loan can slow down the process, and many homeowners abandon their projects at this stage. Working with a loan broker may provide simpler access to credit products, but merchant fees can eat into the contractor’s profit margin and homeowners are often not given the best product to meet their financing needs.
Fortunately, there is a convenient, cost-effective lending alternative available at the “point of sale” thanks to LendKey’s digital financing solutions, which can help contractors close more projects.
Contractors who are approved on LendKey’s platform can offer homeowners access to financing from local community lenders at attractive rates and terms. LendKey’s innovative technology allows homeowners to submit an application “on the spot,” during a meeting with their contractor, avoiding delays that can derail a renovation project. The online process enables instant credit approvals, subject to verification of income, home ownership, and credit history.
Other features of LendKey’s pioneering digital lending platform deliver advantages to borrowers and contractors:
- Access to capital. LendKey matches borrowers with community banks and credit unions who are eager to serve customers in their hometown.
- Attractive Rates. Rates from lenders participating on LendKey’s platform are competitive, and because terms of up to 15 years are available, monthly payments can be more affordable.
- Effective cash management. Contractors submit disbursement requests via LendKey’s online platform, which customers can review and approve digitally, allowing for better cash management for the borrower and contractor.
- No merchant origination fees. There are no prepayment or origination fees, just a $100 disbursement fee each time a contractor receives payment for multi-disbursement projects.
- No need to tap home equity. The unsecured loans don’t rely on home equity, allowing homeowners to proceed without taking value out of their homes. This feature can be particularly important for repairs following a national disaster.
LendKey currently has more than 500 approved contractors on its system who offer a wide range of home improvement services. LendKey offers a blueprint for innovative lending solutions at the point of sale, enabling homeowners to finance renovations for their homes and contractors to build and grow their businesses.
Learn more about how LendKey helps contractors and lenders connect with prime home owners.
[1] https://www.homeadvisor.com/r/wp-content/uploads/2018/06/True_Cost_Report_2018.pdf