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How to finance home improvements in Canada

Financing home improvements in Canada: what you need to know

As a Canadian homeowner, you have probably spent a considerable amount of time trying to find out how to easily finance home improvements while still being able to achieve your other financial goals.

Regularly improving and maintaining your home can be a game changer with respect to increasing the value of your home. You can fund these home renovations and improvements in many ways. In some cases, you can choose a traditional loan from a bank and/or may obtain some financing for your projects through government assistance programs.

You can also consider alternative lenders that can provide you with funding without overly scrutinizing your credit score or putting you through a lengthy and strict application process. The option you ultimately choose will depend on the scale of your renovation project and your own financial situation.

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Understanding your home improvement needs

Before embarking on your home renovation project, take some time to look at what you require to turn this dream into reality. This involves looking at the total cost of your remodel, including the individual cost of the appliances or aspects of your home that you need to improve. The best way to understand your costs is by creating a clear and easy-to-follow budget.

While building a budget, it’s important that it is a realistic budget that aligns with your financial circumstances. In doing so, you will be able to follow your budget with ease and avoid overspending which can compromise your financial wellbeing in the long run.

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Personal savings and budgeting

A home remodel or renovation project can become quite expensive, especially if you’re planning on doing a large-scale remodel. An easy way to solve this is by coming up with a savings plan that outlines the areas of your budget where it is possible for you to save. A savings plan allows you to be cost effective while attempting to achieve your dream remodel.

There are easy ways to make sure that your budget is both cost effective and is helping you achieve your goals regarding home improvements. For example, it’s helpful to include a detailed list of all the costs involved and not just the cost of renovating a certain aspect of your home. For example, you should account for the cost of labor and materials alongside the cost of replacing a room or appliance to get a realistic idea of how much the renovation will cost as a whole.

Similarly, there can be a difference in cost between maintaining existing appliances and fixtures and replacing them altogether. Usually, carrying out maintenance on an existing appliance is cheaper than replacing it completely. Sometimes, appliances can be beyond repair and in such cases, they will need to be replaced.

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Exploring conventional loan options

If homeowners prefer to go down the traditional route with regards to their home renovation projects, there are multiple loan options available to them. Depending on their financial situations, these loans can be secured with either a bank or online lender.

However, alternative lenders can also cater to homeowners who are struggling to get approved with banks or traditional lenders due to a poor credit score. Such lenders are usually flexible with approvals as well as repayment terms.

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Types of home renovation loan options

This refers to a mortgage that is offered at a fixed interest rate. What this means is that the interest rate will remain constant throughout the mortgage term regardless of any changes in the market. In some cases, lenders allow homeowners to refinance their mortgage, allowing them to secure extra funds which can be put towards home renovations.
A home equity loan allows homeowners to use the equity available in their home to obtain a one-time lump sum which they will repay over a negotiated term and. These funds can be used to finance the cost of home renovations and improvements.If a homeowner is challenged to obtain financing from a traditional lender, it may be advisable for homeowners to secure home equity loans with an alternative lender such as Alpine Credits. This is because they do not look at your credit score or income history when they evaluate your applications and mainly look at the amount of equity available in their homes. They also offer flexible repayment terms which can align with your home renovation budge.
Similar to a home equity loan, a home equity line of credit also allows homeowners to leverage their home equity to access funds. Instead of a lump sum payment, homeowners receive a revolving line of credit. Homeowners can borrow funds up to a certain credit limit then repay those funds and borrow again if they need to. The flexibility that a HELOC provides makes it a great option for home renovations as homeowners can borrow and repay loan amounts at their own convenience.Also, it’s important to remember that HELOCs have two different phases, the draw phase and the repayment phase. Borrowers can withdraw funds from their HELOC during the draw phase and are required to make monthly payments solely on the interest that they owe which is calculated based on the amount of funds withdrawn. During the repayment phase, individuals can begin paying down the loan amount itself. As such, a HELOC can be considered a long-term loan.
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Credit financing for home renovations

Much like home equity loans and personal loans, credit financing is another option that homeowners can consider when looking to renovate their homes. Like most financing options, it does come with its own set of unique pros and cons.

In some cases, when an applicant applies for a credit card that’s designed specifically for home improvements there’s a chance that they can benefit from various bonuses and rewards programs. Depending on the lender they choose, these rewards can be in the form of cashback, travel miles, or other rewards. Usually, cashback can be offered in the form of actual cash or points which can be redeemed, both of which can be used to fund various home renovation costs.

However, there are a few drawbacks to using credit card financing. For starters, credit card lenders or banks apply very strict and rigid approval criteria when they evaluate applications. They usually require applicants to have a strong credit score above 700 points and proof of stable income. In addition, credit cards usually carry a higher rate of interest compared to home equity loans and HELOC’s.

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Exploring alternative lenders

As mentioned earlier, there are numerous alternative lenders that can provide homeowners with the funding they need to achieve their dream remodel. The great thing about alternative lenders is that they operate outside the conventional framework that banks operate under. In other words, they don’t follow the same rigid approval criteria that require applicants to have strong credit scores and proof of stable income.

For example, alternative lenders like Alpine Credits specialize in providing home equity solutions that are flexible in their use. The money can be used for business investment, debt consolidation, and more importantly, home renovation. Moreover, your credit score and income status are not a concern for them. Instead, they value metrics like the amount of equity available in your home.

If you’re a homeowner that has a decent amount of equity available in your home, it’s worth looking into home equity financing for home renovations. Loans from lenders like Alpine Credits are much more accessible than loan options from banks because of the flexible approval criteria. Because your home serves as the collateral for the loan, you have the chance to benefit from lower interest rates than other alternatives.

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Tips to remember when borrowing for home improvements

Securing a loan for your dream home remodel is a milestone worth celebrating. By implementing a few tips, you can unlock the financial potential of your renovation loan and achieve your dream remodel in a stress-free manner.

For instance, try your best to stay within your budget and not overspend. In some cases, you may find that you need to stretch your budget to accommodate certain costs, and that’s understandable. However, it’s best to stick to minor adjustments; stay within your budget as spending outside of it can affect your ability to repay your loan.

Also, consider the scale of your remodel as it will influence your budget. If you want to replace a few rooms or aspects of your home, normally this will require a larger loan amount purely because there is more to renovate. Conversely, if you only wish to renovate your kitchen or bathroom, they won’t require as much funding. Ironing out these details before you apply can help streamline the process and make financial planning more efficient.

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Conclusion: how to get a home improvement loan

Embarking on a home renovation project is an exciting time for homeowners. There’s no feeling that comes close to the joy and anticipation that comes with building your dream home. With a clear and comprehensive budget, a sound strategy, and a positive mindset, you will be able to find the financing you need.

In the past, Alpine Credits has helped numerous homeowners achieve their dream remodel. If you already own a home and have a good amount of equity available within it, then consider using a home equity loan to fund your home renovation project. All you need to do is simply click on the application form and a Financial Solutions Specialist will reach out to you regarding the next steps

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Frequently asked questions

The answer to this will depend on the size and scale of your home renovation project. In most cases, a home equity loan is probably the best option because as a homeowner they are easier to qualify for compared to a personal loan or a credit card. Additionally, because your home serves as collateral for the loan, lenders will feel more comfortable with offering you more competitive interest rates.

Yes, it is possible to use a personal loan to finance major renovations. However, remember that because personal loans are primarily unsecured forms of financing that don’t require any collateral, they can be slightly more difficult to qualify for. As such, banks and lenders usually require applicants to have strong credit scores and proof of stable income. There are more accessible options for home renovations in the form of home equity loans and lines of credit.

As a homeowner in Canada, there are a wide variety of options available to you when it comes to loans for home renovations. Depending on your financial situation and the type of renovation project you’re

pursuing you can opt for a home equity loan, a home equity line of credit, personal or even a credit card. Moreover, if these options don’t align with your goals, you can also look into government grants and initiatives that provide homeowners with funding for home renovations.