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Big projects, small budget?

Mortgage refinancing

Mortgage refinancing may be a good option if you want to undertake major renovation projects that you keep postponing because of financial reasons. Waiting to do work on your house for financial reasons can soon turn into a vicious circle because while you are waiting to save the money you need, the cost of labor and materials keep going up! Refinancing your property could give you the means to start your renovation projects today so you can reap the benefits longer.

Examples of projects that could be eligible for mortgage refinancing

  • Finishing the basement
  • Building a garage
  • Expanding or renovating your house
  • Updating your kitchen, bathroom, etc.

Why renovate?

There are several reasons why homeowners may want to renovate. Some simply need a change while others must renovate for safety reasons and to protect their investment (e.g., a leaky roof or a flooded basement).

In general, renovation projects are divided into three categories: lifestyle, thermal efficiency improvement, and maintenance or repair.

  • Lifestyle: Homeowners undertake this type of renovations to improve their day-to-day life (e.g., addition of a solarium or conversion of the attic to add living space for the growing family).
  • Thermal efficiency improvement: Whether you want to insulate walls and foundations or install a more efficient heating system, this type of renovation project will improve comfort and reduce electricity bills.
  • Maintenance or repair: although some maintenance work can be planned in advance, most projects that fall in that category are unexpected and must be done immediately to maintain the house’s integrity and the safety of its inhabitants.

A successful renovation project may be a dream come true, but without proper preparation and supervision this dream can soon turn into a nightmare. Before picking up your tools, make sure to get all the information you need. Ask your contractor’s previous clients for recommendations and check if any complaint has been filed against him/her to make sure you are in good hands. Call your local authorities to know what by-laws you are subject to and ask for the necessary permits for your renovation. Ask friends and neighbours who have done some renovations for advice. Use all the sources of information available and remember the good carpenter’s motto: measure twice, cut once. Mistakes made on paper are neither costly nor hard to correct whereas those made on the jobsite are.

Answer the following questions to see if you are on the right track:

  • Are renovations necessary? Do you have other options?
    While it is important to maintain your home and protect your investment, lifestyle renovations – and even some thermal-efficiency renovations – can sometimes be postponed or downsized (keeping the kitchen cabinets and updating only the doors, using an insulating film instead of changing the windows, etc.).
  • Are your expectations realistic?
    Learn to make the difference between what you want and what is necessary. Almost any renovation project will increase – or at least preserve – the value of your house. However, some renovations will give you more bang for your buck than others when comes time to sell your house: kitchen and bathroom renovations, as well as freshening up the paint will give you the best return on investment.
    On the other hand, if you make renovations, you should expect your insurance premium and the assessed value of your house (and as a consequence your property tax) to go up. However, generally this adjustment remains low.

Screen-Shot-2013-01-17-at-13.41.09Important questions you should ask yourself before getting started:

Thermal-efficiency improvement projects are normally carried out on the envelope of the house or its mechanical systems – e.g., improving insulation, replacing your heating system or installing new siding. These renovations will help you save on energy costs on the long term.

As for maintenance and repair projects – caulking the windows, repairing the roof or replacing the gutters, – they protect the investment you made in your house. They are therefore not only necessary but wise because they will pay off on the long term.

As for cosmetic work, it is a luxury that may seem necessary – you can’t stand the sight of those old white melamine cabinets – but you must always keep in mind that a cosmetic renovation is always a bonus, not a must. It simply allows you to enjoy your home a little more.

So before you start any renovation project, ask yourself the following questions to see if it’s really worth it:

  • Is your renovation practical?
  • Will you get your money’s worth?
  • Can your renovation be adapted?
  • Is your renovation safe?

Screen-Shot-2013-01-17-at-09.00.51How much can I borrow?

Normally, the loan-value ratio must not exceed 80% for owner-occupied properties with 1 to 4 apartments. When meeting with your Multi-Prêts MR mortgage financing advisor, he/she will determine your borrowing capacity with you according to several factors: repayment capacity, total value of the project, etc. This way, you will have all the necessary information to prepare your renovation project. And when you are finally ready to hammer-in that first nail, your Multi-Prêts MR advisor will be there to help you get the best conditions for your loan.



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