Question:

We are very close to paying off our mortgage. We have some renovations/upgrades we'd like to make to our home, ie. better windows, new flooring.

How do we go about 'using the investment in our home' to pay for these kinds of upgrades? Do we borrow from the bank and use the home as collateral? Or how does it work??

Thank you.

Answer:

A mortgage on your home is one of the least expensive interest rate loans available in the market. For instance, we offer five year fixed rate mortgages as low as 4.85% at the time of this writing. That is a rate that is available to mortgage brokers.
It is advisable to fund your mortgage prior to any renovations being started on your home. Once the work has started, the lender may require that they hold back a portion of the funds to satisfy any mechanic's lien requirements. It creates more headaches for both you and the lender.
It is also possible to arrange a secured credit line on your home as a second mortgage if you do not want to re-mortgage your first. Either way it is a simple matter to get equity from your home. The best rates available to you will likely be through a mortgage broker rather than directly from your bank. Hope this helps. John Lozinski

Answered By: John Lozinski

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