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How to pay for renovations with your mortgage
By Riki Unrau
Very few of us are lucky enough to find that move in ready ‘dream home’ we’ve fantasized about since an afternoon at Home Depot became more fun than a trip to Disneyland. At least there you don’t have to stand in line for two hours to have a look at a new Jacuzzi tub right?
There is always something in the home you buy that needs fixing up. Whether it is ripping out that mustard yellow shag carpet or tearing down the kitchen cupboards that have little critters living in them I guarantee there is something you want to change. But few people actually have the money saved to afford such an expense right off the bat. However, did you know that you can add the expense into your mortgage? Here are two ways how.
The first and easiest way would be to hire a contractor. They come out, give you an estimate and your mortgage broker will submit that to the lender. Then that money is set aside to be paid out to the contractor in what are called ‘draws.’ Once each stage of the process is completed, the lender will release a lump sum to be paid to the contractor. Easy peasy!
The second way, if you’re up for it, is to do it yourself. This process is a little more complex as the lender will not pay you upfront. Instead, you have to bear the expense first and then submit everything to the lender afterwards. They will then send out an inspector to verify it’s all done and up to code and then they will release the money to you. A bit of a process but effective nonetheless.
Now, this is just a simplistic explanation of what is involved. Please consult your mortgage broker before you set the wheels in motion. Like everything, there are some conditions and you need to qualify for it before you go crazy with the sledgehammer. And keep in mind that this can usually only be done on new mortgages or if you are about to re-finance your current one.
For more information on how it is all done be sure to contact your friendly neighborhood mortgage broker who can advise you in more detail on how it all works.
… Unless you like the mustard yellow shag carpet of course.
– Riki Unrau is a Mortgage Broker with CENTUM Homeward Mortgage Group Ltd.
