Want to reno your home?

Are you living with a 1980s style bathroom?

  • Carpet on the floor
  • cracked tiles
  • leaky shower
  • old bathtub 

Would you love to upgrade your kitchen or add a new deck to enjoy our beautiful Okanagan summers? How about completing your basement to add a mortgage-helper suite?

Perhaps this seems like a daunting proposition because you aren’t sure how you might afford to make these much needed changes, but there are options available.

Do you know about the renovation financing program? It’s a great financing choice that could help you undertake small or large scale improvements that will increase the value of your property.

At this time, the maximum amount you can refinance your mortgage is to 80 per cent of the current value, but if the refinance is for home improvements, you can refinance up to 80 per cent of your home’s current value and then add the cost of your home renovations over and above the 80 per cent.

There are some limitations depending on the cost of the improvements being made.  

Let’s say you want to complete a kitchen renovation that costs $40,000 and your home is valued at $500,000. We can assume that the new, improved value of your home will be around $536,000.

The cost of the improvement may not add the same value to the home. The rule of thumb is that kitchen renovations normally add between 75 per cent and 100 per cent of the cost back to the value of the home.

You would be able to refinance up to 80 per cent of the new value or $428,800. Without renovation, you could only refinance to 80 per cent of the current value or $400,000.

You may be tempted to use a line of credit, but that may not necessarily be the smartest way to go.

To quote David Chilton, the Wealthy Barber:

“People cannot resist lines of credit. And the worst combination in the country is a line of credit and a home renovation – once they renovate one room, the other rooms pale by comparison, so they go on to the next room and it’s a never-ending cycle of renovation as they get deeper and deeper and deeper in debt.”

This program allows you take advantage of the historically low interest rates with only one payment but there are several steps to being approved for this mortgage, from obtaining quotes from contractors to ensuring that the renovations are not strictly cosmetic in nature.

If you would like more information about the financing options available for your home improvements, please give me a call at 888-561-2679 or email [email protected].

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About the Author

April Dunn is the owner and a Mortgage Broker with The Red Door Mortgage Group – Mortgage Architects. She has been assisting clients to purchase, refinance or renew their mortgages for over 20 years.

April has experience as a Credit Union manager, a Residential Mortgage Manager with a large financial institution and as a licensed Mortgage Broker. By specializing in Strategic Mortgage Planning she has the tools available to build a customized mortgage plan, with the features and options that meet your needs.

April provides a full range of residential and commercial mortgage financing options for clients all over the province of British Columbia and across Canada through the Mortgage Architects network.

Contact e-mail address: [email protected] or by phone at: 888-561-2679.

Website:  www.reddoormortgage.com

The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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