Home Renovation Loans
Everything old is new again — a trend being taking to heart by many older homeowners across Canada.
More than ever, homes in the inner part of cities across Canada are now being renovated. Homeowners enjoy the benefits of larger lots and mature trees in older communities. Also, people want to stay in their established neighbourhoods that already have schools and the amenities close by.
More and more Canadian's are investing money in their current homes. Adding additions to increase kitchen, master bedroom and en suites size are the most common.
So how does a mortgage company help you with process? Using the valuable equity you may already have in your home is one of the best ways to raise funds for such a project.
Here are some of your options to raise funds:
- Refinancing your existing mortgage into a new mortgage!
- Credit card
- Line of credit
- 2nd mortgage
Rates: All the rates currently posted on this site are available to you. These rates may be lower than the rate that you currently have with your bank, therefore saving you money on your overall mortgage payments! And in most cases, the cost of the renovation may even balance out over 5 to 7 years against what you save, thus not really costing you anything!
Interest Compounding: All of these mortgages are compounded semi-annually; meaning your interest is compounded twice a year.
Fees: Ontario Equity charges no fees for these mortgages. Legal fees and appraisal fees may be included in the mortgage advance; this means no out of pocket expense.
Payment options: All payment schedules are available; monthly, semi-monthly, bi-weekly, bi-weekly accelerated, weekly, etc.
Rates: We all know how high these guys can be; 8.9%-26.5% is the range. A large advance or purchase that will not be paid off at months end should not be paid for with a credit card.
We do NOT recommend the following advice, but to be entirely unbiased, we have included it for your consideration: Most banks now offer an introductory rate as low as 2.9% for the first 6 months on certain credit cards. If you can expense the renovation entirely on the credit card without taking out a cash advance, and then have it paid out within the introductory period, it might be worth looking in to. You may even be able to receive reward points as well. Only consider this option if you know all the facts, consequences, and have researched this option thoroughly!
Interest Compounding: All credit card interest is compounded monthly when you take a cash advance the interest is usually compounded daily!!
Fees: Most lower rate credit cards have a annual fee. Some secured credit cards my have a one time set-up fee.
Payment options: You can pay all of you balance or as little as 3% a month with a credit card. Making minimum payments is how the credit card companies get rich!!
Line of credit:
Rates: If your line of credit is secured against you house, rates can be as low as bank prime! But an unsecured line of credit can be as high as prime plus 5%
Interest Compounding: Interest is compounded monthly or 12 times a year!
Fees: If you do not have a line of credit in place, costs incurred may include appraisal fees and in some cases a set up or administrative fee.
Payment options: Although you can pay as much or as little at any time on your line of credit, payments are always based on a monthly minimum. This is where the banks tend to take advantage of you by only requiring you to make a small minimum monthly payment. If you pull out $40,000.00 and make only minimum payments, it could take you 50 years to pay off, more than twice the time it would take to pay off the longest mortgage amortization.
Rates: 2nd Mortgage rates start at 9% and can be as high as 22%.
Interest Compounding: Usually set at a monthly compounding but can be semi-annually.
Fees: Almost all 2nd Mortgages have fees, by the lender and by the mortgage broker. Mortgage brokers will normally not get paid by the lender so a fee by the broker is usually applied. Overall fees can be as high as 10% of the total mortgage advanced. For a $50,000 mortgage the fees could be as high as $5,000 this amount is taken off the advance of the mortgage. Meaning you will pay interest on funds that you never see.
Payment options: Most 2nd Mortgages have monthly payments only. In some cases they will allow you to have bi-weekly payments.
As you can see, there are many options when it comes to finding financing to renovate your existing home. Ontario Equity recommends refinancing as your best option and will help you to find the best mortgage rate and mortgage terms available.
Fill out our easy to use online mortgage application and enjoy living in your new home, rather than worrying about how you are going to pay for it!