Sponsored by Northwood Mortgage Ltd. License #10349

10 Jul


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Introduction

Before you consider financing your home renovation, the first thing that you absolutely have to do is figure out what your home renovation budget is. Many people don’t realize that knowing your budget beforehand is essential, and is something that most potential sources of financial help for this project are going to want to look for.

You should also consider whether your home needs renovations. You need to assess the condition of your building, and understand if the renovations are going to be purely cosmetic, or if they are designed to protect against deterioration, and figure out if there is a temporary fix that could be done in place of a long, costly renovation that you are going to finance. You should also consider what the mortgage rates in the country are.

Check whether you could take advantage of any tax or grant concessions.

Renovating your home is not as simple as just going ahead, getting the financing and moving forward with the renovation project. Different municipalities have different bylaws in place regarding renovations, and not following them could end up costing you a lot of money in legal fees. Furthermore, you could end up having to redo the renovations if they do not adhere to municipal building codes.

In order to determine if your renovations might be reimbursed, or partially covered under the tax code, you should also put together a list of all the items and areas in the house that are in need of renovation. This will also help you come up with the estimated total cost.

Check whether the building would be stabilized after the renovation.

One of the major considerations when getting financing for a renovation is asking yourself the tough question: will the building be stabilized after the renovation has been completed? How will any changes to the piling work, and the demolition stage in general, contribute to the overall stability, or conversely, the destabilization of the building. You also need to consider what you are going to do with all of the waste that is generated during the renovation, and think about ways to salvage and recycle whatever you can, in order to minimize your environmental footprint. You also need to factor in the cost of waste disposal, recycling and salvaging.

Plan the site layout.

Any good renovation is a step by step process that carefully plans and details the procedure from start to finish. It is easy to get distracted by the big picture when planning your renovation, and not realize that the big picture is made up of many small details and micro-renovations. You will need to check the drain and service connections in your home to make sure you are not disrupting them. You should also create an access map and site layout so you minimize any obstructions, hazards or impediments to your progress.

How do renovation loans work?

Once you have done all of the above, then you can begin to secure the renovation loan you need to get the work done. Securing a loan for your reno work is based on a variety of factors including the value of the work, the value of your home, and your existing assets and lines of credit. You can get a personal loan (which is better for smaller renovations), or you can add the renovation cost to your home loan, if it is something more extensive. The loan that you get against your home for a renovation project is usually calculated based on how much value the renovation project will add to your home. If it is determined that the renovation will add a considerable amount of value to your home, it is generally easy to get a loan for it.

Pros and cons of renovation loans.

The pros of a renovation loan are quite obvious. They are a great way to borrow money if you want to restore an old home, add resale value to your home, or take advantage of some really important tax benefits. The cons are that it often takes time to get the loan sanctioned because you have to prove that you and your home are worthy of the loan.

Conclusion

To get your renovation loan you need to determine the cost of your renovation, get your finances in order, know your home value before and after the renovation, find the right bank or lender that believes in your vision, and understand what your end goal is.

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