Spring Renovations

HAVE YOU NOTICED all the newspaper inserts recently from building supply outlets? Spring is in the air and our minds are led to thoughts of home improvements – everything from minor projects to major renovations. According to the Canada Mortgage & housing Corporation, renovation spending has now surpassed new construction. Whatever you undertake, your home renovation project is recognized as a contributor to increasing the resale value of your property.

AS WITH ANY major purchase, you need to have a plan. You should include a contingency for unexpected expenses. Most people would prefer to use their savings to pay for renovations. However, others may need to investigate their financing options. Essentially, there are three: a loan, a line of credit, a mortgage. Each has its own particular attributes and restrictions. A loan may be secured or unsecured. It will usually need to be repaid faster than will a line of credit or mortgage. A line of credit is a flexible financing too! You have instant access to funds when you need them and you only pay interest on the funds that you use. It can be used over and over again.

SOME PEOPLE will find that their existing debt load will not permit a lender to grant them a loan or line of credit as the total family debt payments would exceed their lending guidelines. Assuming you already have a mortgage on your home for it's purchase, a second mortgage against the remaining equity in your property could possibly allow you
to complete that renovation project while allowing for much smaller payments that the other two financing methods discussed. In some circumstances, you might even be able to deduct the interest paid against your income tax. A mortgage broker can explore these alternatives with you and advise as to your best approach before you renovate.

Article: The Millbrook Times – April 4, 2001

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