learn how to get home renovation loan for your home

Can I Get a Home Renovation Loan in Canada?

When it comes to the visions that we have for our home, sometimes it can be hard to have our dreams line up with our realities. After all, many of us have some idea in our head of what our dream home would look like, and for many of us, that idea isn’t cheap to acquire!

If you feel like your home renovation plans are out of reach, you’re not alone. For many people, it is impractical to pay for an entire home renovation out-of-pocket. The good news is that you do not have to pinch every penny in order to pay for a home renovation.  Luckily, there is the option of a home renovation loan.

What is a Home Renovation Loan?

A home renovation loan is a type of construction loan that is used exclusively for home renovations. It may take the form of a mortgage at the time of your house’s purchase (which accounts for a certain amount of costs being used for home renovations), a line of credit (or a personal loan), a loan from the government, or the refinancing of an existing mortgage.

How Do Home Renovation Loans Work?

Home renovation loans are designed to provide funding for home improvements. As they tend to be a long-term commitment, they are not generally used for one-off home repairs, such as a roof or a furnace replacement. They are better suited for ongoing projects that are bound to last a number of months such as kitchen or bathroom renovations. Many home renovation loans are either included in the purchase price of the home in the form of a mortgage, or they are applied in the form of a personal line of credit or private bank loan.

In Canada, there is also something called the CMHC Improvements Mortgage. This program allows buyers to borrow up to 10% of the value of their home for renovations. This loan is an interesting option for first-time homebuyers who may otherwise feel priced out of their market, as it allows them to consider fixer-uppers that they may not have considered before due to the cost of renovations.

How Do I Know If I’m Eligible for a Home Renovation Loan?

Determining your eligibility for a home renovation is not too different than other loans. If you have ever applied for a loan or a personal line of credit before, it will seem familiar to you, although there may be some new considerations that you will need to have.

If you are looking to use a private loan from your bank, you will likely have to satisfy certain requirements such as holding a certain amount of equity in your home. For large-scale renovation projects, this number could be as high as 20%.

For smaller projects, you may instead be directed towards a line of credit instead of a home renovation loan. In order to determine your eligibility for a line of credit, a number of factors will be taken into consideration such as your credit score, your annual income, and the size of the line of credit that you are in need of.

Will My Renovation Add Value to My Home?

Although renovations can help improve your quality of life and allow you to make the most out of your home, they can also be strategic. That is, if you are looking to sell sometime in the near future, it can be advantageous to invest in home renovations before selling. There are many renovations that almost always had value to a home, including:

  • Bathrooms: many potential buyers are looking for a new, fully functional bathroom at the time of buying their house
  • Kitchens: a poorly laid out or outdated kitchen is one of the most popular “deal breakers” for home buyers
  • Floor replacement: floors are one of the first things that a potential home buyer will notice about the house, and options like carpeting are becoming less and less desirable

Financing Options Available Through Interior Elite Contracting

It is now easier than ever to procure the financing required for your next big renovation project. If you are looking to embark on a home renovation, Interior Elite Contracting may be able to offer you up to $50,000 in financing, with terms available up to 5 years. We are also able to offer amortization of up to 15 years (in 5 year increments). Get in touch with us today to learn more — you’ll only pay an administration fee if your application is approved!

Interior Elite Contracting: Professional Renovations and Construction in Kamloops

If you are embarking upon a renovation or new construction in Kamloops, a professional Kamloops renovation company is here for you. Established in 2014, Interior Elite Contracting prides itself on its impeccable customer service and high-quality services. Get in touch with us today for a free estimate if you’re within the city of Kamloops!