Posted on
June 4, 2025
by
Jagtar Singh
Here are some mortgage options available in Ontario for fixing up a home:
1. Purchase Plus Improvements (PPI) Mortgage: This mortgage allows you to add renovation costs to your mortgage when buying a home. For example, if you purchase a home for $400,000 and need $30,000 for renovations, you can take out a mortgage for $430,000, provided you have the required down payment. This option is suitable for minor to moderate renovations and typically requires:
- A minimum down payment of 5% based on the improved value.
- Detailed quotes from licensed contractors.
- Lender approval before starting renovations.
- Completion of renovations within a specified timeframe, usually 90 days.
2. Construction Draw Mortgage: This mortgage is ideal for extensive renovations or complete rebuilds. It releases funds in stages as the work progresses. Key features include:
- Up to 80% financing of the property’s post-renovation value.
- Requirement of a licensed contractor and detailed renovation plans.
- Periodic inspections before each fund release.
3. Refinancing Your Existing Mortgage: If you already own a home and have built up equity, refinancing can provide funds for renovations. You can borrow up to 80% of your home’s appraised value, minus any outstanding mortgage balance. This option offers:
- Potentially lower interest rates compared to other financing methods.
- Extended repayment terms.
- The ability to consolidate renovation costs into your mortgage.
4. Home Equity Line of Credit (HELOC): A HELOC allows you to borrow against the equity in your home, providing flexibility for ongoing or future renovations. Features include:
- Revolving credit with variable interest rates.
- Interest-only payments during the draw period.
- Flexibility to borrow as needed.
5. Private or Alternative Lenders: For properties that don’t qualify under traditional lending criteria, private lenders offer more flexible options, albeit at higher interest rates. Considerations include:
- Higher interest rates and fees.
- Shorter loan terms.
Useful for properties requiring significant repairs before qualifying for conventional financing:
4. Home Equity Line of Credit (HELOC):
A HELOC allows you to borrow against the equity in your home, providing flexibility for ongoing or future renovations. Features include:
- Revolving credit with variable interest rates
- Interest-only payments during the draw period
- Flexibility to borrow as needed
5. Private or Alternative Lenders:
Private lenders offer more flexible options for properties that don’t qualify under traditional lending criteria, albeit at higher interest rates. Considerations include:
- Higher interest rates and fees
- Shorter loan terms
Best Jagtar
