Is your home crying out for an upgrade? Are you eager to renovate your bathroom, kitchen, or other spaces but unsure how to finance the project? Did you find a home you’d love to buy but it needs some work?

Good news! There are several options available to help cover the costs of renovation beyond just dipping into your savings!

Mortgage Refinancing

One option for funding a renovation is mortgage refinancing. It’s best to do this at the end of your mortgage term to avoid breaking your mortgage and incurring penalties. Some mortgage products may allow refinancing outside of this period, so be sure to consult with your mortgage professional. This option is ideal for larger-scale renovations or remodels.

With refinancing, you can borrow up to 80% of your home’s appraised value (minus any outstanding mortgage balance). If approved, refinancing allows you to access funds immediately and typically offers lower interest rates than standard credit cards or personal loans.

Purchase Plus Improvements (PPI) Mortgage

If you haven’t yet bought the home, financing your renovation at the time of purchase with a purchase plus improvements mortgage can save you some hassle later on. This type of mortgage is designed to help buyers make simple upgrades, rather than major renovations involving structural changes.

Simple renovations include painting, flooring, windows, a hot-water tank, a new furnace, kitchen updates, bathroom updates, a new roof, basement finishing, and more. Depending on whether you have a conventional or high-ratio mortgage, if it is insured or uninsurable, and which insurer you use, the Purchase Plus Improvements (PPI) product allows you to borrow between 10% and 20% of the initial property value for renovations.

Financing Improvements Upon Purchase

Similar to the PPI mortgage solution, another option allows you to finance your renovation project at the time of a new purchase by incorporating the estimated costs into your mortgage with CMHC Mortgage Loan Insurance.

With this option, you can obtain financing with only a 5% down payment for both the purchase of your home and the renovations, up to 95% of the home’s post-renovation value! There are no additional fees or premiums, and you can earn added rebates for energy-saving renovations.

Line of Credit or Home Equity Loans

Lastly, you have the option of using a secured line of credit or a home equity loan to finance your renovation.

By securing your renovation loan against the equity in your home, you can typically access up to 80% of the property value at any time. This option usually offers lower interest rates than unsecured financing and provides flexible access to funds whenever needed.

Whether you’re planning a small or large renovation this year, be sure to contact our team at Mortgage Man DLC before you start to ensure you’re maximizing the benefits of your money and mortgage!

Source: DLC Marketing Team