How Can You Finance Your Home Renovations?

Your home is an important investment. We all have different reasons as to why we want to renovate. If the family is growing, you want to make more room; it could be to improve the look of your home, or the need to conserve energy, among many other things.

Smart renovations will also improve the value and utility of the property. Now that you have determined the need to renovate, you have to consider your financing options. You will first have to determine the scope and scale of the project.

Don’t forget to consider your repayment plans. For Canadians, the following are the financing options for your home renovations:

1. Home Equity Line of Credit (HELOC)

It works in the same manner as a personal line of credit. It is more cost-effective as compared to using your credit card and drawing cash advances. You can borrow as much as your limit, and you will require mastering discipline to repay, and you pay as you wish.

2. Another Mortgage

This method provides you with upfront cash, and you will have a repayment plan that’s structured. It is a loan that you take in addition to the existing mortgage on your property. You will have to pay back the loan amount, on top of the payments required on the original mortgage.

3. Equity Take-Out

It could be an ideal option for a homeowner whose lease is due for renewal and has been putting off plans for renovations. If you have equity, you can access some of it by borrowing on the “as-if-improved” value of the home. You can also opt to replace the current mortgage with a new one that’s based on 80% of the appraised value of the house.

4. Financing Improvements Upon-Purchase

If you have found your dream home but still need to make a few renovations upon purchase, you can borrow more money as part of the mortgage financing for the purchase. It could be in undertaking repairs that add value to the property, e.g., getting new windows, roof, kitchen, etc.

Here, you add the estimated cost of the renovations to the mortgage. With a 5% down payment, you can get up to 95% of the value of the property after improvements, with a CMHC Mortgage Loan Insurance.

Before you break down your walls for renovations, it is advisable to get professional advice on your financing options. Reach out to Expert Financial Corp for your mortgage solutions.