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Why Get A Home Renovation Loan?
Don’t just throw a tarp over your roof if it caves in. When something goes wrong in your home, you need to make sure you do something about it. Taking care of a home isn’t like living in an apartment. You can’t just call the landlord to fix it. Further, you just can’t pack up and move to another house. Your home is your kingdom. It is your estate to care for. Just like everything in your life, your home needs care and consideration. The purchase price is just the first step in a long line of unfortunate costs all homeowners bear. But don’t worry, it is easier than you think to access to funds you need to truly make a home worth living in.
It doesn’t matter what the reason, when you need a renovation, you need to make sure that the financing is in place to fund the project. Putting away a spare change from each day will only go so far and it would take years to ever raise enough to pay for a renovation. Instead, cash upfront allows you to get the work done so you can enjoy the house that you deserve. This article details the process and the reasoning behind the benefits of a home renovation loan.
Why Renovate a Home?
If you are thinking about either fixing your home or renovating your home, you are making the right decision. Think of a house as cloths for your life. It may sound out, but it works for the comparison. Your cloths protect your body from the elements of the world. They keep you warm or cool. They protect you from the sun, rain, hail, wind, dust, and other elements. They also keep you socially appropriate. Your cloths could allow you to fit in at a business event, social party, or school dance. However, unlike taxes, cloths aren’t guaranteed to be around forever. Cloths get dirty, need to be washed, tear, need to be mended, age, get out of style, and unfortunately eventually need to be replaced. Updating your wardrobe allows you to stay relevant and protected with the best fabric technologies of the day in the best styes of the day. Would you wear a cummerbund to a business meeting? Of course, you wouldn’t do that. Instead, you would wear something appropriate for the type of industry and the type of meeting. That is just common sense.
The same thought process applies to your home. Your home protects you and your life from the elements of the world. It keeps your warm or cool, away from the wind, sun and rain, and protected while you sleep. Functionality is part of the purpose of a home. The style of the home is also a function. If you are looking to improve the function, you may need to change a style. Having a dinner party usually works better when there isn’t shag carpeting everywhere. Swimming laps usually works better when you actually have a pool. Houses, like cloths, don’t last forever. Home technology improves as well, increasing your protection and safety.
The point of all of this is, home renovations aren’t just done to improve a home’s resale value. Granted, renovations can add thousands to the value, the importance of them is that home renovations can improve your quality of life before you sell. So, don’t wait. You can enjoy the renovations now with a home renovation loan. The improvements, fixes, renovations, or even additions can enhance the value and quality of your house. You wouldn’t walk around in rags, so why live in them?
What Types of Loans Are Available?
Once you have decided to make the right decision and fix the roof or add an in-law suite, you need to start talking with a mortgage broker who can set up the perfect renovation loan for your needs. Everyone’s financial situation is different, and everyone will have different costs associate with their home renovation. Traditional banks only have access to the mortgage products that their bank offers. A mortgage broker will be able to custom build something because they have access to a wealth of products from a wide range of banks. This means you get to shop for your dream product. But what types are generally available?
Top-Up Home Equity Loan
There are two main types of home renovation loans. The best and most common type is the home equity loan. These loans use the equity that you already have in your home to access the cash that you need to pay the remodeling crew. Home equity is just the value of your home that isn’t burdened by a mortgage. This isn’t what you bought your home at. This is the current value of your house. Often, for a home equity loan, your house will be given an estimate or appraisal. This will be the basis for the loan as is usually made of different recent sales of similar houses in your area in size, age, quality, and space. The appraised value minus 20% is the mortgageable value. We will then subtract the current value owed on the mortgage, and the remainder will be the maximum loan allowed as a home equity loan. For the best and most up-to-date information, reach out to a mortgage broker today to learn what your options truly are for a home renovation loan.
How To Use a Non-Bank Second Mortgage Loan For Renovations
When you are interested in making renovations to your already owned and mortgaged property, you want a new kitchen, put in a pool, or build a new bedroom. Your primary lender may be unwilling to provide the funds to do this. We can help you find a non-bank lender who then has a second charge to offer you the funds for such a project. You will normally have access to funds up to your current home’s Loan to Value Ratio (LVR). This is 80% of the current appraised value minus the current amount owed on the mortgage. Most lenders will not account for the upgrades you are making, but your home’s overall value can also increase when you make the correct additions.