Is Renovation Mortgage Worth Considering? Why is a Renovation Loan So Popular?

Is Renovation Mortgage Worth Considering? Why is a Renovation Loan So Popular?

Are you considering renovating your home and giving it a new lease of life? Whether it is installing a deck for your patio or making your living room space more inviting and vibrant for your friends and loved ones to enjoy, it can cost a lot of money to get it done. Not many people have the finances to pay for home improvements upfront, and many take out a renovation mortgage to fund their home improvement plans like a renovation mortgage loan. A renovation mortgage is a financial instrument where the lender i.e. the bank or a private lender lends a sum of cash that is not secured against your property or any other asset. A renovation mortgage loan is a cost-effective way to borrow a large amount of money.

What is a renovation mortgage loan?

A renovation mortgage loan is an unsecured loan that is taken out to fund house renovations. The borrower will need to fill out an online loan application and state what is the purpose they are planning to use the funds for as home renovations. In the application form, the term home renovation will cover all types of changes you might want to make to your property. From redecorating the garden to installing a new bathroom or kitchen and much more. If you are looking to apply for a renovation mortgage in Brampton, you cannot go wrong with Harpreet Puri Mortgage Agent.

Is it worth getting a renovation mortgage?

If you are fortunate enough to have the necessary available funds at your disposal, then you do not need to take out a renovation mortgage loan. However, most people do not have that financial luxury, hence a renovation mortgage makes perfect sense. It is an unsecured personal loan that has fixed repayment terms and fixed interest rates. With a renovation mortgage, you can carry out a wide range of home improvements with just one loan.

Benefits of a home renovation loan:

  1. Low monthly payment: Similar to a traditional mortgage, the payment can spread over thirty years, and the monthly payment amount is usually low.
  2. Low-interestest rates: The interest rates for a renovation mortgage are usually in line with first mortgage interest rates.
  3. The borrower has the option to convert the mortgage to a traditional 30-year fixed mortgage or an Adjustable Rate Mortgage (ARM).

Is it necessary to get a renovation mortgage?

If you are considering buying a house that is not the best, but has potential then most lenders will provide up to 80 – 95% of the value. However, they may retain some funds till some repairs to the property are completed. The property will be inspected by a surveyor and will be intimate if there is any more work needed. Before the balance funds are released, the property will need to be reinspected and there will be a fee involved typically. The works include:
  • Damp-proofing
  • Roof repairs
  • Rewiring
  • Repairs to the central heating

Why does one need renovation insurance?

Renovating a house is one of the biggest investments in life that most will have to make. Without proper insurance, you risk your entire investment which could put you in a precarious situation if anything goes sideways. Your existing home insurance policy will not cover any renovation work, so it is crucial to ensure your property is insured. It also helps if you have a higher credit score, as it can help improve your affordability for a mortgage. If you need a renovation mortgage in Brampton, or to find out more details about renovation mortgage loans, please do not hesitate to contact the team at Dominion Lending Centres today.  
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