Summer time is the perfect time to complete must needed renovations around the home or cottage. Whether it is for a new deck, finishing the basement or a pool – home renovations can get expensive.
The best thing to do if you are planning a home renovation is to start off with a budget. Compare pricing on materials and even consider getting an estimate by a contractor. Sometimes trying to save money in the short term by doing it yourself can cost you way more in the long run. Also usually contractors can actually get the best deals on materials.
you decide to do the work yourself, outside of researching the cost of materials, you will also need to research permits. Most of the time, something as simple as taking down a wall or adding a door, requires a permit. Once you have finished researching cost and materials, you can then research financing.
The best thing to do if you are considering home renovation financing is to be realistic about what the total cost will or may grow to be. One big mistake folks make is when they start buying materials and items through various credit cards, a sort of “buy as you go approach”. This can be catastrophic and often results in folks running out of money before their project is completed.
Another issue with financing renovations on credit cards or line of credit products is that the interest is usually high so it can take forever to pay them off.
The best course of action if you are planning a renovation project that requires financing is to use your home to finance your renovation. You can refinance and take out a line of credit or second mortgage or even refinance the cost of the renovation into your first mortgage.
If you refinance your mortgage and take out a second mortgage or line of credit, it will stand independent of your first mortgage. This means it will have a separate monthly payment and its own repayment terms. You can be as aggressive as you want with the amortization so that you ensure the debt is paid off as soon as possible. For example, a $20,000 mortgage at 12.99% interest amortized over 5 years only bears a monthly payment of $450 per/mo and the debt is paid off in 5 years.
Don’t wait until you have maxed out all your credit cards and are frantically looking for a way to finish your project and pay off the debt. Plan your project properly from the beginning and you will not only complete the renovation you’ve been dreaming of but also at a price and terms you can live with. For more information visit http://www.firstequity.ca/
