Whether revamping your family home dating from the middle of the last century or bringing it up to date before selling it, finding financing for renovations is not always easy. Indeed, it is sometimes difficult to convince banks to give you a sufficient amount at an interest rate that will not put you in the red.
It can be very beneficial for you to consider doing business with a private lender to finance your home improvement projects. Regardless of your credit history or financial history, there are private lenders who are willing to provide you with financing at a competitive price and on highly advantageous terms. Stop bumping into the bank’s many refusals and see what the private sector can do for you and your beautiful ambitions of a newly renovated house!
Private lending, in what form?
The undeniable advantage of the private sector is that lenders play according to their own rules and grant financing as they please. However, it would be wrong to believe that they give funds blindly to the first comer! They seek to give you all the funds you need to carry out your projects while protecting their own interests!
So, what form will your financing take for your renovation project from a private lender? You will have access to a loan of up to 75% of the value of the house according to its estimate after work. This means that the future value of your home will be assessed before the work is started and you will be entitled to a percentage of this valuation as a private loan to complete your work.
The interest rate for this type of loan is obviously variable, but it is around 13% over a period of at least 6 months, although these loan conditions are subject to negotiation with your private lender!
In addition, lenders usually require the payment of progressive disbursements during construction. This means that you will have to pay amounts as loan repayments at various stages during the progress of the work. These steps need to be clearly established so that no confusion occurs and you do not default on the payment agreement!
For what types of renovation can I get private financing? Once again, each lender is free from his own actions. However, most of them agree to provide funds for major alterations to your property, to expand your home, to carry out major repairs and necessary to maintain the premises as well as other modifications to the building’s destination. .
It is important for you to know that your home and renovation project will likely be subject to evaluation. This is a way for the lender to analyze the amount he can give you based on the risks and benefits he receives.
Why not do business directly with the bank?
Doing business directly with the bank may be the best option for you if your financial situation is in order. Indeed, as the bank analyzes your financial file thoroughly before granting you any type of loan and yours is all beautiful, this avenue may very well be the right one for you. However, if you have encountered a few hiccups during your course, the loan path is probably the one you will have to consider.
In addition, some financial institutions refuse to finance construction or renovation works before they are completed, which makes the task for the least risky and problematic if you do not have the necessary funds to start. the works. This is all the more unfortunate if you have to use your credit cards and get into debt in the long run.
But what kind of loans will the banks offer you? Most financial institutions will opt for a renovation line of credit that will give you access to certain pre-authorized funds that will be used to carry out your work. The difference with a credit card is that the interest rate attached to it will be more advantageous for you.
In the absence of such a line of credit, the bank will certainly offer you to finance your work through a personal loan . The advantage of such a loan is its accessibility, but it inevitably comes with the disadvantage of having a high interest rate.
Some institutions will also present you as an alternative, to finance your work with a line of credit mortgage . You will use the amount already repaid on your mortgage to access the funds needed to complete your renovations. If your mortgage is going well and your financial situation is healthy, this is an option worth considering.
Although these methods of financing have been proven successful, getting financing with the bank is inevitably a tedious and painful process. Their eligibility criteria are extremely demanding, making access to funding all the more difficult for many people with a history of lumpy credit.
Some banks also offer lending options tailored to the size of the renovations you make, be they small, medium or large. The importance of the work you are considering will dictate your borrowing capacity. For large jobs, you may be able to borrow a portion of the value of your mortgage, while for minor work, you will have to choose a line of credit or a personal loan.
This is where the benefit of the private loan comes out! Private lenders have their own standards when it comes to analyzing the credit file. In fact, your credit rating is not so important to them. These are especially focused on your future ability to repay them and the payment guarantees you can provide! They are therefore very accommodating when it comes to funding residential renovation!
What is progressive disbursements?
Banks and private lenders often require the payment of progressive disbursements for renovation and construction loans. This means that during your renovation project, you will have to repay part of your loan, whether it comes from the bank or a private lender, at various stages of the project.
For example, in the case of a construction loan, you may be required to make repayments at specific stages of the progress of the work. Here’s an example for a $ 100,000 loan
-20 000 $ when pouring the foundations
-30 000 $ after the implementation of the framework
-25 000 $ after laying the floor
-25,000 $ once finished
-Total payments = $ 100,000 paid progressively.
It is therefore a way for you to repay your loan in installments, but it is also a way for your creditor to guarantee a portion of his payment throughout the work.
The implementation of progressive disbursements sometimes requires the intervention of several experts, such as assessors of other professionals who are responsible for ascertaining the progress of the work and therefore the time at which the payments are due. In construction, as it is the establishment of a property, the services of a notary are often retained to ensure the legality of each operation and the compliance of the project with the law.
This principle of progressive disbursement is also used in residential renovation by private lenders. It is also an eligibility criterion that many of them to grant the loan!
Is it possible to obtain a private loan for the construction of an entire house?
Absolutely! Although the first reflex of potential self-builders is to turn to the bank, we all know very well that nothing guarantees an approval from it. Standards are high and more than one person will return home empty handed. If you recognize yourself in this scenario, why not turn to a private lender to finance the construction of your home.
Now private lenders are now ready to offer senior mortgages to finance the construction of your home. A first mortgage means that the lender will be the first to be able to exercise the right of mortgage against you if you default on the payment agreement. It is therefore an advantageous mortgage for the lender that allows him to offer terms of payment that are just as much.
But what are the limits to private financing? Subject to the limits of each lender, many of them agree to finance construction projects ranging from $ 30,000 to $ 1 million. So, whatever your means, there is a lender on the market offering services that fit your needs.
In addition, the interest rates for such a mortgage are around 9-10%, which gives you ample freedom to build the house that you have in mind. You can even borrow up to 75% of the value of your property, giving you access to significant amounts of money that are crucial to your project. Some lenders even offer the option of only paying monthly interest by only paying back the capital at the end.
Are you planning green renovations? Take advantage of tax credits for your work!
In recent years, the Quebec government has put in place a subsidy program to encourage people to make eco-friendly choices for renovations. It is in fact the RénoVert tax credit that applies to a multitude of residential renovations.
What are these works that could get you this tax credit ? If you plan to change your windows , choose to replace them with Energy Star energy-efficient windows.
Your roof could benefit from a little love? When changing the cladding, consider installing a roof with GREENGUARD or EcoLogo certified insulation. These materials are of superior insulation quality preventing excessive energy loss.
If you live in a house built towards the end of the last century, you may still be heating your home with a wood-burning system that does not comply with current emission standards. This is much more polluting than modern systems and the government wants to encourage you to change them. That’s why he applies the RénoVert tax credit to anyone who changes these old heaters with systems that have Canadian or US environmental certification.
By choosing these materials, you will not only save the environment, but your wallet as well. Although these materials may be slightly more expensive to purchase, they will save you on your electricity bill year after year. This is a long term investment after all!
Let Bye Bye Debts find you a private lender for your home renovations!
Give your home the look it deserves! Do you want to live in a home that really represents you or do you want to make a flip to get a quick profit? Whatever your reasons, there are private lenders ready to give you the funds needed to complete your project!
Stop being shut out by banks obsessed with your credit report and deal with trusted people who know how to help you realize your vision and renovation projects.
If you are ready to give the first shot of mass in the kitchen wall, let Bye Bye Debts be the one to find the right private lender for the renovation of your home!