Home Renovation Loans: Does the Added Value Outweigh the Costs and Other Considerations
Did you know that you can get a renovation loan as part of your first mortgage on an Edmonton home? Well, you can receive home renovation loans both during and after acquiring your home. While taking out a loan is not an ideal scenario, ugly bathrooms, outdated kitchens and fading paint may make it necessary in order to make the house comfortable and hopefully more valuable. However, is it worth the associated costs?
Pros of Home Renovation Loans
The first upside is that you have access to several types of loans that can meet any size and price of the project you intend to undertake. It will generally cost you more to remodel a kitchen than to update lighting and so it is only right that home renovation loans cover all these projects.
With a secured home improvement loan, your home is the collateral so you can borrow more at a lower interest rate. While an unsecured loan is smaller, it is better suited for minor home renovation projects.
Home improvement loans have longer payback periods compared to other loans – typically 10 to 15 years. Additionally, you have a lower interest rate that is fixed or variable.
The main justification for home renovation loans in Edmonton is that, if you use it properly and on the right project, it will pay for itself. The reasoning; the loan goes directly towards raising the value of your home – your biggest asset – which is instantly reflected in your home's value.
Cons of Home Renovation Loans
In the unfortunate incident that you default on this loan, your credit will tank thereby hampering future borrowing. Worse still, you may end up losing your home if it was your collateral.
The biggest hope when taking a home improvement loan is that your home will appreciate in value. However, the factors that determine home value are largely out of your control. If the real estate market takes a hit, you may end up being very disappointed.
While home renovation loans offer a chance to raise the value of your Edmonton home, ensure that you are aware of the downside if all does not go as planned. BMC Mortgage & Investments continues to help Edmonton families attain their dreams. Contact us today to get personalized advice.