There is a direct correlation between different types of work done to your home and the amount the cost of works increases the homes market value.
And when certain projects that you’d like to undertake outstrip your available cash flow or credit, then an Ontario home renovation loan is something to consider to get the project funded.
There are a number of different ways to finance a home renovation project depending on the size of the project in terms of dollars and the scope of work.
In some situations it may make the most sense to apply for additional unsecured and/or secured lines of credit to keep the cost of financing low and allow you greater freedom in managing the cash flow of the project.
In other cases, we could also look at arranging a construction loan secured by a mortgage likely in second position behind the first mortgage that is already registered against your property.
A formal construction loan for a renovation would then have a series of construction draws outlined in the terms and conditions of the agreement whereby at the completion of certain stages of work, funds would be released or advanced to pay for the costs incurred to that point.
Because we are dealing with a home that is already under occupancy, the lender risk will be a lot lower compared to an actual house construction, so the costs of financing as well as the options to consider will be very good in most cases.
Like any form of financing, the applicants credit and financial profiles will dictate what types of Ontario home renovation loan options that will be available.
More distressed credit and/or cash flow will provide for more limited and higher cost options, but considering the smaller dollar amount of a home renovation compared to a build, the cost of financing is relatively small.
When your home renovation project is complete, we can also work with you to either refinance your first mortgage if you’re plan is to pay the incremental costs over a longer period of time, or get a second mortgage in place with comparable rates and terms to your first mortgage.
If you are planning a renovation project or in the middle of one and require an Ontario home renovation loan, I suggest that you give me a call so we can quickly go through your requirements together and discuss different options to finance the project.