How and where can you find financing for home renovations? Well, there are a lot of options like home renovation centers such as Home Depot or IKEA. Even though these companies offer great products, they can’t match a financial institution’s lending rates. Borrowing from unconventional sources like this means higher annual interest rates and monthly payments.
Here are some options for getting renovation finance for your home.
A Home Equity Line of Credit (HELOC).
You can leverage your home equity and get a home equity line of credit. This is basically just a loan that you can pull money from and payback regularly until your term ends. Since the HELOC is a credit against your home, you can get a higher amount and it can cover all of your renovation plans. This is one of the best options for a renovation loan. This sort of credit usually comes with a low-interest rate which starts from 3-4 percent.
A Second Mortgage.
You can consider getting a second mortgage to cover your home renovation financing if the HELOC is not a good option for you. In case of default, a second mortgage is a mortgage second in priority. This means your first mortgage lender must be compensated first in case of a loan default. The second mortgages come with a higher interest rate than the first. However, you still benefit from rates much lower than what a retail store can give, so this option is also highly praised.
You can refinance your existing mortgage.
It might be a good idea to refinance and benefit from the current low mortgage rates if you are already several years into your existing mortgage. You’ll be able to use some of your home equity to get the cash you need to renovate. You’ll also save a lot of money on interest.
Do you need some help to getting started?
Talk to our top-rated mortgage agent in Toronto and we’ll help you find the right type of loan product for your home renovation project.