Don't Let Your Reno Bankrupt You! |
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If you are thinking of changing fixtures to upgrade a powder room or your family has decided to add a pool, planning for a renovation is important. Equally important is how the improvements will be financed. A great deal of effort is put into the renovation and how it should proceed. A solid plan will indicate the desired result, but there’s one vital piece of the puzzle that is not always part of the overall plan. How should the renovation be for?
Here’s where things can take an unwanted turn. Exhausting all sources of credit reduces a credit score significantly. In many cases, it lowers it to the point that a customer may not be approved for the consolidation loan that they need at the end of the project. This is especially true due to recently imposed tighter lending guidelines. The solution is easy. At the beginning of your plan, put real emphasis on the total estimate of the improvement and be sure to add another 15 per cent for contingency. I have personally completed several large renovations and I know that it’s virtually impossible to keep to the Consider that home improvement loans are at about 7-9% and mortgage rates are below 4% for a 5 year term, it makes sense to use your equity to finance your improvements or renovation. You may also be able to consolidate a range of higher interest borrowings (credit cards and car payments, for example) at the time of your mortgage refinancing, thereby freeing up more cash for improvements. Ideally, a well-planned renovation can boost both your enjoyment of your home and its equity. This is the time to consider your options for Spring! We are happy to look at your financing needs and advise on how best to secure additional mortgage funding. Apply now! Elfie Hayes as seen on the CTV National News, Rogers TV, published in RENO & Décor Magazine and profiled in Canadian Mortgage Professional Magazine.
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I have observed a common problem time and again that can be eliminated with little effort. A renovation is planned, the contractors are hired and the raw materials are purchased. When the renovation starts out small, the materials are often bought with credit. Many times multiple sources of credit are used to finance the initial stages of the upgrades, with a plan to consolidate all the bills into a new mortgage, home equity loan or line of credit, when the project is complete.
