Given today’s affordability challenges, finding your perfect dream home right off the bat isn’t always feasible. But did you know there are financing options that allow you to incorporate renovation costs directly into your mortgage? This means as long as you find a home in your desired location, you can then customize or update it to meet your specific needs and tastes.
Home renovations not only help make your new home truly yours, but they can also increase its value.
Kitchen remodels, bathroom additions and energy-efficient upgrades are among the top renovations that can yield the highest returns on investment. Secondary suites have also emerged as popular reno projects as a way for homeowners to create an additional revenue steam by renting out a portion of their home.
However, the question of funding these projects often presents a challenge. That’s where your mortgage steps in, not just as a means to own your home, but as a resource to improve it.
How to access your home equity
Let’s take a look at some of the key financing options available for renovation projects.
1. Purchase plus improvements
This financing solution is a valuable tool for homeowners who want to renovate a newly purchased property, allowing you to add the cost of your renovations to your mortgage for as little as 5% down. By incorporating renovation expenses into your mortgage, you can make improvements right from the start, turning a nearly-right house into your perfect home.
2. Home equity loans and lines of credit.
For existing homeowners, one way to access the equity they’ve built up is through a home equity loan or a home equity line of credit (HELOC). A home equity loan provides you with a lump sum, ideal for funding a significant renovation project with a defined budget. A HELOC, meanwhile, works more like a credit card, giving you access to a line of credit based on your home’s equity, which you can draw from as needed. This option is particularly useful for ongoing or phased renovation projects.
3. Mortgage refinancing
Another avenue is refinancing your mortgage. This involves taking out a new mortgage that replaces your existing one. If your home’s value has increased since you first purchased it, you may be able to borrow more than what you currently owe, providing extra funds that can be used for renovations.
However, the current interest rate climate may mean refinancing at a higher rate. But with rates expected to fall over the next year and beyond, refinancing could soon become a more appealing option.
4. Government assistance programs
A fourth option is to take advantage of the multitude of government programs available to help homeowners finance their home improvement projects. These programs often include grants, loans, and tax credits aimed at encouraging energy-efficient upgrades, improving accessibility for seniors or individuals with disabilities, and supporting low-income homeowners. Each program has specific eligibility criteria and application processes, and generally vary by region and the scope of the renovation project.
Expert advice is key
Before proceeding with any financial decision, give me a call so I can help you understand the options available, the total funds you may be able to access, and how to align your renovation goals with your financial situation. A well-informed decision can lead to a more beneficial and stress-free renovation experience. Get some further info here!
Let’s unlock the potential of your home’s value together!!
