If working from your kitchen table is no longer the novelty that it once was, it’s probably time you set up a dedicated home office. Given that so many of us have found ourselves working from home for the first time this past year, there’s no shortage of advice about how to create a perfect home office (opens in new tab). But while you may have ideas in mind, and a wish list of things that you want to buy, you’ll also need to work out how to finance your new home office setup.
Fortunately, there are many ways in which you might be able to pay for the items you’ve earmarked to set up your ideal work environment, and to fund any bigger renovations that might be needed too.
1. Ask your employer
If you’re employed by a company, and they want you to work from home during the course of your normal duties, it’s always worth asking your employer if they’re willing to help get your home office set up. Of course, with the pandemic necessarily closing most offices, most employers are now used to receiving such requests, and will also want to make sure that their employees feel happy and healthy when remote working (opens in new tab).
As a result, many employers will have funds readily available for home workers to buy essentials such as home computers (opens in new tab) and keyboards for home offices (opens in new tab), as well as a desk and chair. And knowing that you’re adding to your normal household bills too, many employers might also make a contribution to help cover the cost of your internet provider (opens in new tab), utilities, and phone use.
2. Refinance your mortgage
If you’re planning on making some major alterations to accommodate your new workspace, you might consider refinancing your mortgage if you need to raise a larger amount of funds to get the work done. With the interest rates on offer from the best refinance mortgage companies (opens in new tab) having sat either at, or near to, record lows during the pandemic, it’s an excellent way to pay for such a renovation, and could even pay for itself if your new home office setup adds value to your home.
3. Tap your home equity
If wholesale renovations aren’t required, and your borrowing requirements aren’t quite so high as a result, you might prefer to use a home equity loan (opens in new tab), or home equity line of credit (HELOC), to raise the funds that you need to finance your home office setup. You’ll still be making use of the capital that is stored in the value of your home, but without having to refinance your entire mortgage.
If you want a lump sum, any interest you pay on a home equity loan is tax-deductible if you use the funds for home improvements. And if you use a HELOC to draw on your line of credit only when you need it, you’ll only pay interest on what you’ve taken so far.
4. Consider a personal loan
If you want to borrow without using your home as collateral, the best personal loans (opens in new tab) are where you might look. Loan sizes typically range from $1,000 all the way up to $100,000 from some lenders, and you’ll know exactly how much you need to pay back each month and for how long. Loans terms can sometimes stretch as long as 12 years, and if your credit score (opens in new tab) is up to the mark, you’ll be able to secure the very best rates.
5. Credit cards for small costs
If your home office only requires the finishing touches, and none of the expense associated with major renovation, a credit card (opens in new tab) can be a useful way to meet the smaller costs of furnishings or a laptop (opens in new tab).
Look out for 0% interest credit cards that will give you a certain amount of months to pay off what you owe before interest starts to build. Alternatively, a reward credit card can give you cashback or loyalty points depending on what you spend. That said, a credit card that isn’t managed properly can quickly result in rapidly growing debt. If you borrow in this way, you must always make at least your minimum monthly payment each month, and should try to pay off what you owe as soon as possible.
6. Approach the SBA
If you want to create a new home office setup and run your own business or are self-employed, it might be possible to secure funding via the U.S. Small Business Administration (opens in new tab) (SBA). While the agency doesn’t lend money directly, it operates a number of programs with partnering lenders that aim to make it easier for small business owners to access the funds they need.
7. Home office tax deductions
Although you won’t be able to fund a new home office setup using home office tax deductions (opens in new tab), always make sure to claim what you can. Unfortunately, the rules changed in 2018 so that only self-employed workers can make use of such deductions. You’ll also need to show that your home office is used exclusively and regularly for conducting business, and that your home is your principal place of business.
If you are eligible, when filing your taxes (opens in new tab) you’ll be able to claim deductions for expenses directly attributable to your office, as well as some indirect costs, including property taxes, part of your rent, mortgage interest, utilities, and your cell phone plan (opens in new tab).