Financing renovations through your mortgage

Financing renovations through your mortgage

Have you ever gone to buy a house but as you’re walking through it you're thinking of all the upgrades you would want to do to the house if you were to buy it?

Many of us don’t know about home improvement options available to us here in Canada. How many times have you heard of a home sale or a renovation not happen due to money? Or perhaps you love the house, but prefer to have an updated kitchen, or maybe need a new roof.

Many institutions allow 10%, or even more, of the purchase price to be added onto the mortgage amount for home upgrades. For example, you’re buying a house for $300,000, you can now get quotes for upgrades, up to $30,000.

The process works like this: you close the deal and move into the house, renovations start anytime after you take possession, once the renovations are complete, we prove to the lending institution that the work has been done and therefore the house is now likely worth more. It is at that point that the bank will release the added funds and it will be added to your mortgage.

So in this example, the mortgage balance on the home will now be $30,000 higher than the original.

This is a great way to make sure that you are paying the least amount of interest possible. Mortgage money is typically the cheapest form of borrowing. It has lower rates and also the interest is compounded less per year.

So if you are thinking of doing any renovations, whether it’s a new house, or even the house you currently live in, be sure to plan ahead and know all your options. Our goal is the same as yours, for you to pay the least amount of interest possible.