Table of Contents
- What Is a Renovation Mortgage?
- Advantages of a Home Renovation Mortgage
- Can You Add Home Renovation Expenses to Your Mortgage?
- How To Use Your Mortgage for Home Renovations
It is a reality that homes are costly, whether they are brand-new or 100 years old. Additionally, freshly renovated residences command a premium price. On top of this, Canadians are eager to renovate. Recent research indicates that 44% of Canadians have either recently completed home renovations or plan to do so soon.
Due to the high cost of renovation equipment, materials and labour, purchasers of fixer-uppers must add the cost of renovations to their mortgage. And occasionally, homeowners require financial assistance to pay for renovations to make a property livable or more pleasant.
Learn how to add renovation costs to a mortgage in Alberta and receive answers to some of the most frequently asked issues regarding renovation mortgage financing.
What Is a Renovation Mortgage?
The word “renovation mortgage” refers to a loan secured by real property for renovation purposes. The loan amount, interest rate, period and other factors depend on your type of renovation mortgage.
When purchasing a property, you may worry, “Can I obtain a mortgage with additional money for renovations?” Or, “Can I utilize a mortgage to finance home renovations?” The short answer is maybe.
Essentially, each circumstance is somewhat unique. Your home equity, the house’s market value, and your individual financial status all play a role in renovation mortgage financing.
The first stage is determining what you need or want to accomplish. Next, you will need to get an estimate of the cost. This can assist you with narrowing down your renovation mortgage financing alternatives and determining if a renovation mortgage loan is a viable option for you.
A mortgage is not the sole option for financing home renovations or repairs. Other potential home renovation financing possibilities include:
- Using your money to make home renovations without incurring debt
- An unsecured credit line
- A guaranteed credit line (home equity line of credit or “HELOC”)
- A personal loan
- A loan from a relative or friend
Advantages of a Home Renovation Mortgage
Home renovation financing solutions are enticing because they are easy to set up and obtain. Nevertheless, if you are planning a more comprehensive renovation, a home renovation mortgage can provide the following advantages:
- Reduced interest rate
- The monthly payment amount decreases as the loan is amortized over a longer time
- Access to a larger sum, based on the value of your house