Table of Contents
- Is It A Good Idea To Use Your Mortgage To Finance Home Renovations?
- Mortgage Refinancing
- Financing Your Renovations During The Home Purchase Process
- A Second Mortgage To Finance Renovations
- Other Methods For Financing Renovations
- Mortgages To The Rescue At Renovation Time
Is It A Good Idea To Use Your Mortgage To Finance Home Renovations?
Canadians love renovating. And in a perfect world, we would all have sufficient cash flow to perform the needed home renovations without resorting to borrowing. This is not always the case, though.
Fortunately, your private mortgage can assist you in completing your home renovation project. This is how.
Mortgage Refinancing
You may fund your improvements via mortgage refinancing if you own a property.
This form of loan enables you to swiftly get more money by tapping into the equity in your home.
Take note that the total of your present mortgage plus the extra loan must be less than or equal to 75% of the market value of your home.
Renovations are favourable on two fronts when financed via mortgage refinancing. The refinancing loan’s interest rate is comparatively modest – substantially lower than the rate on a credit card, for example.
Second, this refinancing loan, which may have a fixed or variable interest rate, may be repaid over a much longer time than a personal loan.
Financing Your Renovations During The Home Purchase Process
If you plan to purchase a new property, you may include the cost of improvements in the original mortgage application.
The qualifying purchaser may borrow up to 80 percent of the home’s expected value after renovations.
This sort of financing offers many of the same benefits as mortgage refinancing: payments are amortized over many years, and the interest rate is competitive.
To qualify for this loan form, you must explain the expected cost of modifications to your financial institution when applying. And after the renovation work is complete, you must inform them and submit a post-work inspection report and meet all other requirements.
Renovation financing is available with as little as a 5% down payment on the property’s purchase price.
A Second Mortgage To Finance Renovations
If you are already a homeowner and have sufficient equity in your house, taking out a second mortgage might be excellent to finance your repairs.
If offered by a private lender, this financing does not demand a minimum credit score or evidence of income. Financing may be supplied immediately — there is no need to go through the long approval procedure required by conventional banks.
Notably, the total of the first mortgage loan and the renovation costs must be less than or equal to 75% of the property’s market value.
Other Methods For Financing Renovations
Mortgage refinancing and purchase finance are not the only financial alternatives for improvements. Various methods include the following:
- a line of credit secured by your house
- a personal loan obtained via the use of your credit card
Each of these methods has its particular advantages. Contact us for more information.
How To Assess The Relevance Of Your Renovation Project
Before starting any renovations, it is always a good idea to consider the following criteria to see if the work will be beneficial:
- the improvements’ urgency and significance
- the improvements’ cost
- the increased worth of the property after the improvements the time
- the investment necessary for the renovations
Mortgages To The Rescue At Renovation Time
Mortgage refinancing and financing at the property purchase are both excellent options for funding home upgrades. These two financing choices provide compelling benefits, whether for house upkeep, repairs, or renovations.
We recommend you speak with your private mortgage lender or financial institution about your renovation funding needs. To learn more, call (780) 756-1119 now.