Choosing Renovation Over Relocation? Here’s How To Get It Funded

October 15, 2018, In: Finance

Tony Joe, a real estate salesman with Re/Max Camosun was asked whether it’s better to renovate an existing property or purchase a new one. The response was a simple “The key is the location”. For renovators, this means keeping those renovations within the value of the property. While moving to another property may seem tempting, there are many benefits to remain in the existing one, with a low-cost mortgage just the start of it. Funding these renovations, however, may prove to be a little bit more tricky if homeowners aren’t sure where to look.

Small To Medium Loans May Require Short-Term Funding

Minor fixes such as a quick paint job in the kitchen, some grouting in the shower, or even changing the skirting boards around the house might be a little steep to take out of savings, but not yet pricey enough to tap into the mortgage. For small fixes, unsecured loans with a low interest rate are a great option if the installments should run over a five-year period. For those who are confident that they can pay it off anywhere between 6 to 18 months, a 0% APR credit card might be the ideal solution.


Making The Most Out Of Home Equity

When a property’s value exceeds the outstanding balance on the mortgage, consumers can apply to use the equity in the property. There are many ways to access home equity and for homeowners who require extensive renovations, this might be the right option. This is because these loans can be styled to run with the remainder of the mortgage term or a period of up to 10 years. This is a great solution for those who don’t want these renovations to cause issues for their cash flow.

Ever Heard Of A Title I Property Improvement Loan?

While the Federal Housing Administration (FHA) is a key player in this loan type by providing the security aspect of the loan, interest rates and fees aren’t determined by them. The Title I Property Improvement Loan is the ideal loan type for those who require a small amount and don’t have the necessary collateral. These loans are suitable for those who wish to borrow up to $12,000 for a small dwelling such as a condo, or $25,000 for larger family homes. The FHA does, however, charge an annual premium of $1 for every $100 borrowed to cover their costs for carrying the added risk.  

Whether making small changes or completely changing the look of the house, there is a loan type to suit it.


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