If you’re looking to do some home renovations but don’t have all the cash up front to pay for materials and contractors, here are a few ways to use mortgage financing to bring everything together.
Probably the most straightforward solution, if you’re an existing homeowner, would be to access home equity through a mortgage refinance.
Depending on the terms of your existing mortgage, a mid-term mortgage refinance might make good financial sense; there’s even a chance of lowering your overall cost of borrowing while adding the cost of the renovations to your mortgage.
As your financial situation is unique, it never hurts to have the conversation, run the numbers, and look at your options. Let’s talk!
If you’re not in a huge rush, it might be worth waiting until your existing term is up for renewal. This is a great time to refinance as you won’t incur a penalty to break your existing mortgage.
Now, regardless of when you refinance, mid-term or at renewal, you’re able to access up to 80% of the appraised value of your home, assuming you qualify for the increased mortgage amount.
Instead of talking with a bank about an unsecured line of credit, if you have significant home equity, a home equity line of credit (HELOC) could be a better option for you.
An unsecured line of credit usually comes with a pretty high rate. In contrast, a HELOC uses your home as collateral, allowing the lender to give you considerably more favourable terms.
There are several different ways to use a HELOC, so if you’d like to talk more about what this could look like for you, connect anytime!
If you’re looking to purchase a property that could use some work, some lenders will allow you to add extra money to your mortgage to cover the cost of renovations. This is called a purchase plus improvements. The key thing to keep in mind is that the renovations must increase the value of the property. There is a process to follow and a lot of details to go over, but we can do this together.
Confidence, too. And the confidence that comes with having the numbers on your side starts with having the right people on your side. People who speak numbers, speak your language and whose reputations speak for themselves. People who understand your goals and work with you to meet them. People like you. For trusted financial advice and service that makes you feel like you belong, please connect anytime, it would be a pleasure to work with you!
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