It feels like we just began 2019, and now we’re saying goodbye to another year and another decade. It’s a great time to start fresh and tackle something important, like a home renovation or much-needed repair. The problem for many people is…how exactly will you pay for such a project, particularly if your savings aren’t adequate to cover it all? If you’ve got a vision to upgrade that kitchen, revamp that bathroom, blow out some walls for an open concept…whatever it is you’re dreaming about just might become your reality with the right financing.
These are few great ways to rock that renovation resolution in 2020:
Access your home’s equity
If you’ve got equity built up in your home, it can be a wise way to finance your renovation. Equity simply means the assessed value of your property minus the mortgage amount left owing. If you’ve lived in your home for several years and have been paying down your mortgage, you’ve likely got some equity built up to access. Home equity loans (or lines of credit – called a HELOC) are often low interest, and the good thing about them is that you can take out just what you need.
Line of credit or personal loans
If you don’t have much or any equity in your home, you may still qualify for a personal loan or line of credit to help finance your renovation; it all depends on your current income and debt load. It’s important to shop around for the best rates as you don’t want to be stuck paying high interest on your renovation loan for years to come. Further, be wary of using your credit card unless you plan on paying it off in full each and every month. The interest rate on credit cards from either a financial institution or big box store can be on average around 20% and go up to a whopping 29.9%, which could easily put your renovation way over budget and damage your credit rating at the same time.
Government rebates and incentives
There are some programs offered through the provincial and federal governments that can help with the financing of your renovations, but they only cover a small amount. Typically, they can come in the form of tax credits, rebates or grants, but they have specific qualifying rules. For example, some grants are given for renovations that help the environment or are related to energy savings, while others may be to better accommodate our elderly population or people with disabilities. These incentives come and go, so it’s always advisable to do your research before banking on them.
Don’t forget that while your renovation may be a big undertaking both personally and financially, there’s a good chance your renovation could help increase the value of your home when it comes time to sell. Buyers LOVE a home with newer kitchens, bathrooms, windows, floors, roofs, and lighting for example, so be sure you’ve considered future resale values if that’s something you’re concerned about.
If you’re tired of your home just not working for you but you really don’t want to move, it’s comforting knowing that you have solid options to add those personal touches so that it finally fits you and your family. Be sure to connect with me before you get to work and start the new year off right. As a certified mortgage broker and financial advisor, you can rest assured you’ll get financially sound advice. It’s my job to make sure you understand the process and all your options if you’re thinking about a home equity takeout, HELOC or another loan to finance your project. Connect with me, Darren Robinson today at 705-230-1306 and let’s get you set up to start the new year with a bang!