Private mortgages work well with home renovations. That's particularly true for homeowners who don't qualify for a traditional bank loan. The same can be said for those who need quick access to funds to make an emergency repair. Private mortgages for home renovations are also suitable for people with bad credit scores.
The top five home renovations for private mortgage financing include upgrades, additions, and traditional choices like renos for basements and bathrooms. Mortgage Broker Store provides private mortgage loans for these renovations and others. They can even loan the money to stop a power of sale or foreclosure.
Introduction to Private Mortgage Financing for Home Renovations.
Private lenders offer quicker approval processes than more traditional institutions like banks. Their process focuses on the equity built up in the property, which is the part that's been paid off and is mortgage-free. This differs from a bank focusing on stable income requirements and a good credit score.
One of these loans allows homeowners to renovate and increase their property's market value. Self-employed individuals and others with unconventional incomes can also get these interest-only loans for high-ROI upgrades and emergency repairs.
A private mortgage is also more flexible. That means there are fewer restrictions on what you can use the money for than a traditional loan. That allows for different renovations like premium countertops or custom cabinetry.
1. Kitchen Remodels
Are you facing a power of sale or even a foreclosure? A private loan can help you stop either process. You can also use some of the money for a kitchen remodel. This is one of the best home improvements, with a return of 75% to 100%.
Remember, a private loan is based on your house's market value and equity. Updating lighting, cabinets, and countertops can increase the appraised value of your home.
2. Bathroom Upgrades
Installing energy-efficient appliances and fixtures in your bathroom is also considered an excellent renovation choice. These simple projects can lower your utility costs and your environmental footprint.
- Replacing an old toilet with a more energy-efficient model boasting a compact design is a quick option.
- Even smaller jobs like resealing tiles and refreshing grout can make a bathroom look more attractive to potential buyers.
- Homeowners with bad credit can apply for a private mortgage for a bathroom upgrade. These can include everything from toilet paper holders to cabinet knobs and towel bars.
Two other things to remember: Equifax reports that people with credit scores below 660 can struggle to get good terms from traditional lenders. Private mortgages are interest-only loans with one-year terms. Their streamlined application and quick turnaround times make them perfect for these renovations.
3. Basement Finishing
Private mortgage financing could be an excellent choice for a basement renovation. That's especially true if you've got a budget because these loans are short-term and have interest-only payback options. They are for one year with the option to renew.
- The home office is an excellent addition because it's practical. It can attract buyers who are looking for additional rooms. Finishing a basement this way means paying attention to proper lighting and soundproofing. Reducing eye strain is essential in a basement office, so renovators should choose LED lights.
- Another attractive renovation is a playroom. It's excellent for children and provides a practical meeting spot for the family. However, if you're considering selling, remember that this renovation increases the square footage of your property and the asking price.
It's important to remember that some must-haves for a basement renovation include waterproofing and HVAC upgrades. A private loan has a more streamlined application process that relies on the equity you've built in your market value rather than a credit score. Equity is the amount of mortgage-free property—it's what you own.
4. Home Extensions and Additions
A second-story addition is a big project. However, it's a good way to boost your equity when you sell in high-demand areas. Consider adding additional bedrooms. Some homeowners even remodel their garage into a home office or a rental space.
These types of renovations usually require hiring a contractor. Make sure to get a written contract. It should include all the details, such as a payment schedule, materials and labour, and a comprehensive timeline.
5. Energy-Efficient Upgrades
Homeowners facing a power of sale will want to consider upgrades with a good return on the investment. A private loan can provide them with the money to stop this and or a foreclosure.
LED Lighting
Private loans are an excellent way to access the equity that you've built up in your property. The equity is defined as the part of the property owned outright. In other words, it's the market value of a house, subtracting the outstanding debts and mortgages.
Solar-powered LED lights are an excellent way to brighten up the outside of your home. These bulbs have longer lifespans than traditional ones.
Energy Efficient Appliances
Many of these appliances have modern technology that monitors energy usage. Look for ENERGY STAR-certified appliances, such as refrigerators. High-efficiency top-loading washing machines use less water than standard models.
These choices and others reduce your utility costs and lower your carbon footprint.
Solar Panels
A solar panel upgrade can increase your market value because it's an advanced technology that can integrate into your roof or windows. There are three types to choose from: flexible, lightweight, and thin-film panels.
Polycrystalline panels are an affordable choice that works best in sunny areas. The top-of-the-line monocrystalline panels last up to 30 years and usually come with excellent warranties.
Jonathan Alphonso is a real estate expert who offers free consultations on private mortgage loans. He maintains several websites, including Mortgage Brokers and Power of Sales Ontario.
You can reach Jonathan at 416-499-2122 or by email at [email protected]