Renovation mortgage options in Canada can vary dramatically from lender to lender and from client to client depending upon your renovation budget, current equity position, and current credit and income.  We have many years of experience in working with our clients to ensure they have the best renovation mortgage options and that their transaction works beautifully.

Two different renovation mortgage options:

Secured line of credit option (HELOC):

• This option is a great fit for clients who have strong equity positions in their homes as it allows them to access funds via cheque, debit card, or online money transfer at their sole discretion.  For example if your contractor completes their work and asks for a $25 000 payment, you simply write him a cheque from your line of credit account and your are all set.  
• The disadvantage to this structure is that it is only a fit for clients who have an existing strong equity position.  The government of Canada limits secured line of credit lending to 65% of your home value, and overall mortgage lending to 80% of your value.
• For example, assuming a $200 000 renovation:
  • If our client has a home worth $500 000 and does not have any current mortgage or line of credit on the home, we could approve a line of credit for you up to $325 000, you only pay for the money that you use, you have low interest only payments,  can draw the funds as described above, and can repay it at anytime.
  • Your monthly interest only payments if you drew $200 000 would only be ~%584.
• A very important item to note: DO NOT START YOUR RENOVATION UNTIL THIS FINANCING IS APPROVED AND FUNDED.   With this type of lending facility your home must be 98% complete at the time of funding.

If you have already started the renovation or do not have enough current equity in your home then the next option is your best choice.

Draw mortgage option:

• This renovation mortgage option is a great fit for clients who have already started a renovation or do not have enough equity in their home to access sufficient funds to cover the cost of their renovation.
• With this structure we would complete an appraisal to determine the current home value and also the as improved home value.  Once this is complete we would schedule your initial funding amount along with typically two future draws.
• Lets look at the same example as above, assuming a $200 000 renovation:
  • Our client has a home worth $500 000 and currently owes $300 000.  The after renovation home value is $700 000 as per the appraisal.  With this being the case we would approve a total  mortgage of $500 000, with an initial draw amount of $400 000 (80% of the current value) and two subsequent $50 000 draws to be paid at predetermined stages of renovation completion.  With this structure our client receives $100 000 up front and two additional $50 000 draws to cover their entire $200 000 renovation.
• This structure is not available as a line of credit, rather it is completed as a mortgage with great rates and terms

We have years of experience in working with our clients who are completing a renovation mortgage and ensuring they have the best options available.  Please feel free to contact me so we can work on your options together.

Rylan Hahn 403-802-7201 – for renovation mortgage options