Mortgage Advice from The Mortgage Pug, Alex McFadyen

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Posted on August 04, 2015

Alex McFadyen with Resvick & Associates tells me the best ways to finance your home renovation project:

* To learn about how Arden Interiors can get the most out of your renovation buck click HERE.

For smaller projects, credit cards are an option, though interest rates are high and it isn’t tax deductible, but there are no up-front costs, such as appraisal and origination fees.

Another option is a personal loan or line of credit, but in both of these cases your interest rates will be higher and with the case of a loan you will have to pay it off in a fixed amount of time usually of 5 years or less which will keep your monthly bills high.

Check out my interview with Alex!

Your best option for increasing the equity in your home, may very well end up being your home! There are plenty of different options for using your home’s equity to mortgage your construction but here some of the most popular:

1. Re-Finance – You can borrow up to 80% of the equity in your home in order to gain the funds to do your home renovations & consolidate any outstanding debts. Keep in mind your home may be worth much more than you originally bought for which means you may have more equity than you think!

This is best for those who:

i. Have more than 20% equity in their home

ii. Are paying a higher than current interest rate

iii. Close to Mortgage renewal

2. HELOC – A home equity line of credit allows you to borrow against the value of your home as above up to 65% or a combine mortgage and HELOC of 80%. Interest rates are variable with a HELOC and it is re-advance able as you pay it off.

This is best for those who:

i. Have much more than 20% equity in their home

ii. Are comfortable with a variable rate on their HELOC

iii. Looking to re-advance and borrow against their home regularly

3. Purchase Plus Improvements –An often overlooked option when buying a new home, you can now borrow up to 10% of the value of your home to do renovations even with only 5% down. For more details please contact me:

This is best for those who:

i. Do not own a home or are looking at new property

ii. Have less than 20% down payment

iii. Cannot afford a new home and want their home to reflect their tastes

Keep in mind these are not the only options to borrow money but are some of the best and most popular. For more information or to see if these options are right for you please give us a call or send an e-mail for a free assessment.

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