How to Finance Home Renovations

Winnipeggers love renovations!  According to Manitoba Home Builders Association president Mike Moore in a recent Winnipeg Free Press article, “Winnipeg has historically been one the country’s busiest home-renovation markets” and that in 2014, 58% of homeowners plan to renovate their homes.  Here in Manitoba, most homeowners are looking to either make updates or to create more room and plan to spend on average nearly $20,000.00.

The top six home-renovation projects for 2014 are:

  1. Basic home maintenance – 57%
  2. Bathroom renovations – 33%
  3. Kitchen renovations – 32%
  4. Replacing windows & doors – 29%
  5. Landscaping (including outdoor deck) – 27%
  6. Basement renovations – 23%

-          Source : CIBC

Renovating your house – whether it’s building an addition, giving the kitchen a facelift or finishing the basement – adds to your quality of life and increases the resale value of your home.  Whether you are purchasing a new home that needs a little “TLC” to make it your dream home or are choosing to renovate your current home rather than move, there are several financing options available to you.

Purchase Plus Improvements are programs offered by mortgage lenders that allow approved applicants to incorporate renovation costs up to 10% of the purchase price (to a max of $40,000) to their mortgage. This enables you to purchase a home, renovate it the way you like and incorporate the cost of the renovation into your new mortgage - for as little as 5% down payment based on the improved value of the house.

Refinancing your mortgage is a commonly used method to finance home renovations by freeing up equity in your home.  For example, if you want to borrow $30,000 to build an addition and you have $120,000 left to pay on your mortgage with your home valued at $200,000, you may be able to take cash out by raising the principal on your mortgage to $150,000. This would allow you to pay for the entire renovation up front. *The maximum you can now refinance your home for is 80% of the value of your home.  In the example above the maximum mortgage allowed would be $160,000 (80% of 200,000 value).

Refinance Plus Improvements is a program that is similar to the purchase plus improvements. The lender will let you refinance up to 80% of the future value of your home based on the improvements you plan on doing as long as the renovations are approved by the lender.

Questions?  Contact the Mortgage Professionals at VERICO One Link Mortgage & Financial. They can provide you with unbiased, professional advice to help you secure the financing to make your renovation dreams come true.

Interested?  Apply online now!