The first step for any home renovation should be to get a sound financial advice. Craig Bannon, the manager of the mortgage specialists for the metro Halifax area with RBC advised to talk to your bank, financial institutions or anybone you're dealing with. And if you're not dealing with anyone, then you should find someone to talk to because it's important to sit down to get advice. He also says that there are factors to consider when choosing the right option to finance your renovation such as how much the renovation will cost and the amount of equity that you have in your home.
Bannon says that a credit card can be considered one option for smaller renovations. A credit card is convenient and you can earn loyalty points when you use it. But this is not a long-term borrowing solution because of the high interest rates credit cards charge which are usually between 10-20%
A HELOC or Home Equity Line of Credit is another possibility for larger home renovations. HELOC has lower interest rates which is it's big advantage against credit cards because it is secured by the value of the home being renovated. It can finance up to eighty per cent of your home value, but it's major drawback is that it's a little more complicated to make purchases with it. You can't actually pay for a store purchase with a HELOC, which is a big disadvantage with this option but you can always pay for your purchases with a debit or a credit card and then just replace it later.
Refinancing your mortgage is another borrowing option. It will give you up to ninety percent of the total value of your home. Refinancing gives you a lot of flexible options like chooosing the variable of fixed rate and choosing how long the term will be.
Barry Rathburn, a TD Canada Trust mobile mortgage specialist from the Vancouver Island Area said that now is a very appealing timing to renovate, the interest rate term you pick now, no matter what it is, will beat the twenty-five year average handsomely.
He also recommends looking into the incentives that are available for renovations that are energy efficient. The energy efficiency saves you some cash in the long run and offers incentives (from different levels of government) to help you beat the cost.
VIA MetroNews
Keyword: Credit Card
