Today, you have myriad options to access cash, and the invaluable help of mortgage brokers to help you locate a good loan. However, you still need to understand your options and make an informed decision.
Here are some tips.
1. Start off by determining the fund amount needed to get started on the project, and how much you can afford to borrow
2. Narrow down your loan options to those that meet your requirements
3. Look for lenders that are most likely to provide the kind of loan you want How do you determine the borrowing amount? Get an accurate estimate of how much your project will cost. Offer a firm bid to the contractor you hire, breaking down costs into materials and labor.
Add about 10 per cent for any ‘extras’ you may need to pay. Include equipment rental fees and permit fees into your calculations. You will also have to assess how much your lender may be willing to loan. This will largely depend on factors like the LTV (loan to value ratio), your credit rating and income.
When you take out a loan for financing renovations, two important aspects to consider are the interest rate and the loan term. Decide how long you’d like to carry the loan, and the type of rate – variable or fixed – you are more comfortable with.
With clarity about these basic elements, you can start looking for matching borrowing solutions and products.