When it comes to renewing your mortgage one of the biggest missed opportunities that I see is people just letting their mortgage auto-renew. It’s a missed opportunity because after reviewing your current mortgage, its terms and your family’s current situation, you could be not only saving money long term by locking in at a lower interest rate but you could also be pulling money out of your mortgage to renovate your home, buy that family cottage you have always wanted or to help consolidate any credit card debt you may have into a more manageable monthly payment. However, if you have missed reviewing all of these options before your mortgage has auto-renewed or if you are only a year or two into your current mortgage term and are wanting to find a little extra cash to put towards a renovation or large home improvement specifically you could be eligible for what is called a refinance plus improvements mortgage.
What is a refinance plus improvements mortgage?
A refinance plus improvements mortgage is a special kind of mortgage that allows you to secure the extra amount of funding you need in order to pay for the renovation, while also being backed by the bank for your usual mortgage.
With this kind of mortgage there are three main benefits to the home owner. The first is the added funding that the lender will let you secure to pay for the renovation without having to go to the bank to ask for a secondary loan to cover those costs.
If you did go to bank for an additional loan, it would also mean having to pay two loan payments each month, whereas by rolling the loan into your current mortgage you would also benefit from only having one monthly loan payment to make.
The third benefit to the home owner is that when this loan is rolled into your mortgage you would pay a much lower interest rate over your entire amortization period. In comparison to the interest you would pay on the loan from a bank or to the interest of the loan on a credit card, the savings alone are worth investigating to see if a refinance plus improvements mortgage is right for you.
What do I need In order to qualify for a refinance plus improvements mortgage
Alike applying for a conventional mortgage you would need to have your credit in good standing but you would also need to
- Submit professional estimates for the renovations that you are wanting to secure the funding for along with your mortgage application
- Make sure that the additional funding requested for renovations is not in excess of 10% of the original value of the home or $40,000 – whichever of the two is less.
If you think that a refinance plus improvements mortgage might be the right fit for your new renovation, give me a quick call at 705-315-0516 and we can take a look at the finer details to get the process of applying started today.