Dreaming of that new kitchen or bathroom?
Perhaps you are tired of the cold concrete and bare walls in your basement or maybe you need new windows or a roof – whichever the case, if you have equity in your home – you can use up to a total of 80% of your home equity and use the money towards renovating your home in Vancouver, BC.
Most people dream about buying their next home with the bigger kitchen and extra room, but they often overlook the costs of selling their existing home and then buying their next home. With realtor commissions, HST and lawyers fees to sell the existing home and Property Purchase Transfer Tax, Lawyer’s Fees, Home Inspection and Appraisal Fees to purchase the next property, the decision is really worth thinking about.A new home purchased at $900,000 in Vancouver, BC would cost approximately $16,000 alone in Property Purchase Transfer Taxes, plus $1,000 in lawyers fees, add the appraisal, inspection and other miscellaneous costs and you are looking at close to $20,000 alone in just closing costs. Imagine using that money towards upgrading your own home!
Some homes are just not worth renovating and some homes are just too small for the growing family and need to be sold, we wrote this article to show our readers that there is an alternative to selling and buying. The renovation alternative could end up being either much cheaper or possibly more expensive than buying the next home, depending on the renovation budget including contingencies and how elaborate the renovation will be.
If you are home owner looking to refinance for a home renovation loan in Vancouver, BC, here are several financing options:
1. If the mortgage is almost up for maturity or is in an open term, you may want to consider refinancing the mortgage to take out the additional equity needed for the home renovation. Refinancing on an open mortgage or a mortgage at maturtity will have minimal penalty costs from the existing lender – which is a main reason why most people do not break their existing mortgages. In Canada, most lenders will allow a refinance at up to 80% of the value of the home.
2. If there is already an existing mortgage on the property and the penalty calculation is too high or if the first mortgage has an amazing rate that is no longer available, there is a possiblity of adding a second mortgage or a home equity line of credit behind the existing mortgage but only to a maximum of 80% of the value of the home. Second mortgages are slightly higher risk for the lender and most lenders are only willing to entertain a combined loan to value of between 75 to 80%.
3. If the existing mortgage is a Variable Rate or Adjustable Rate Mortgage, the maximum penalty that the existing lender will be able to charge to break the mortgage will only be a total of three months interest. This means that the penalty would be much smaller than if you were to have a fixed mortgage.
4. If there is no mortgage on the property, you can still apply for an equity take out or refinance to withdraw up to 80% of the value of the home. No existing lender fees will apply of course!
5. If the existing mortgage is already almost at 80% of the value of the home, you can also apply for a unsecured credit card or line of credit through your financial institution. Any unsecured credit is usually at a higher rate than secured credit, however you will only pay interest on the portion that is used.
A new kitchen or bathroom can add value, a new look and feel to your home, making you fall in love with your home once again. Our advice would be to always find a Home Renovation expert that is highly recommended by a friend or relative to assist you with your home renovation as mistakes can be very costly in the renovation business. Ask for references, a portfolio of previous work done, make sure that they’re licenced and insured and finally check to make sure that they are truly a registered renovation business in Vancouver, BC.
For more information about a home renovation loan or refinancing in Vancouver, BC, please Contact Us.
