Financing Renovations with the Canadian Home Renovation Plan
Spending on home renovations in Canada is at an all time high with an estimated $63 billion dollars being spent annually on making houses feel a little bit more like homes. It’s not surprising, given that if you ask those who have bought or built a home if they would change anything, the answer is yes more often than not.
Homeowners however, don’t always have the budget to pay for a home renovation all at once.
The good news is there are several ways to fund a home renovation project. If you already own a home and have a mortgage that is less than 80% of the value, a line of credit or refinance may be the answer.
If you are just in the process of purchasing a property, you can often make improvements immediately even if you don’t have the cash to do so by using the Canadian Home Renovation Plan (CHRP).
CHRP allows a purchaser to add renovation costs of up to $40,000 or 10% of the value of the property, whichever is less, to the mortgage. A borrower can complete a $20,000 kitchen upgrade for as little as $93 a month, or a $25,000 basement development for as little as $117 a month. New windows? New flooring? You can add both for less than $40 a month.
The low monthly costs of upgrading when you purchase aren’t the only benefits of the CHRP plan. In a sellers market, where listings are scarce and deals on the most ideal properties are even scarcer, CHRP gives a homebuyer the ability to purchase homes that others have overlooked. Furthermore, those same properties that others overlook often just need some love and care, which allows them to be purchased at a discount and upgraded for a profit.
CHRP also has one other benefit, the benefit of time. Financing a home renovation when you purchase a property rather than waiting allows you to pay todays prices for the work, but pay for it in tomorrow’s dollars. Waiting until you have the cash to pay for a renovation or until you have enough equity in your property to refinance will likely cost more due to higher building costs than financing a renovation today.
For more information on financing your home renovations give an Accredited Mortgage Professionals (AMP) at Mortgage360 a call.
Nolan Matthias holds a Bachelor of Arts Degree in Economics, is the co-founder of Mortgage360, and the author of The Mortgaged Millionaire.
