Making home improvements can help you get the most out of your investment. However, the type of loan you choose will depend on your financial profile and what types of improvements you want to make. Some of the common loan options available include home improvement loans, credit cards and home equity loans.
Are home renovations tax deductible in Canada?
A home renovation loans is a personal loan that allows you to finance your home’s renovation costs. It is usually unsecured and typically pays back with interest in fixed monthly payments. Home improvement loans can range from a few thousand dollars to tens of thousands. Some lenders offer a prequalification process that does not affect your credit score, making it easier to compare loan terms before applying.
When deciding on which home improvement loan to take, consider how extensive your project is and how much time you want to spend paying it off. Then, focus on the lending landscape and find a lender that’s most likely to approve you. The lenders you consider should have a track record of providing mortgages and other types of loans for homeowners with a variety of credit profiles.
For a more substantial project, the best option is a home equity loan or line of credit. These are personal loans that use your home as collateral and are repaid in 5-30 years via fixed monthly payments. The amount you can borrow is based on your home’s current market value minus how much you owe on the mortgage. Alternatively, a cash-out refinance is an option for homeowners with plenty of equity who want to lower their mortgage rate at the same time as financing improvements.