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Financing Options for Major Renovations

Renovating your home in Oakville can help you achieve any number of goals, from more usable space to greater luxury. Whether you are contemplating adding on a large addition, building a home theatre or want to reroof your home with a different material, you are going to need money, though. Financing for major renovations can be somewhat tricky, but there are solutions available if you don’t have the cash on hand to pay for the renovation outright. Here are some of the better options for your needs.

Unsecured Loans

Unsecured loans can be good options for your renovation financing needs. In this type of situation, you apply for a loan with a lender, but you do not use anything as collateral. Unsecured loans can be attained from numerous different lenders, from banks to credit unions to specialty lenders in town. However, if you decide that this is the route for you, then you need to understand a few things.

First, the lender will consider this a higher risk loan, no matter what your credit rating might be. Therefore, you can expect higher interest rates. The more risk the lender takes, the greater their reward will be. So, you need to consider how much you will be paying in interest for the loan before you go this route.

Secured Mortgages

 

If your home is paid off, or you have a considerable amount of equity built up in it, you can take out a secured mortgage. Second mortgages can be almost any amount, and can provide you with the funds that you need to finance your major remodel. Mortgages are also available from many lenders, but you will find that a national lender is probably going to be the best option here.

With secured mortgages, your interest rate will vary considerably. However, it will be lower than with an unsecured loan, because you are using your home as collateral. In essence, your home is the guarantee that you will repay the money to the lender. As with unsecured loans, you need to choose your lender very carefully here. Terms for mortgages can be confusing, and an unethical lender can make a poor loan option seem like a great idea.

Choose Your Lender

No matter which method you choose to pursue, it’s vital that you choose a lender wisely. Make sure that you understand all the terms and conditions in the loan agreement, and make certain that the lender will explain anything that is unclear. If they won’t explain, then you should leave the deal on the table.



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