Types of Loans

There are three major common forms of loans available for renovation or construction. These are mortgage add-ons, credit lines, and mortgage + credit plans. Mortgage add-ons add the total loan costs to your current mortgage, taking roughly 80% of your home equity removing current mortgage balances. This type of loan is likely the most common, as you can add on the additional cost to a pre-existing mortgage.

Credit lines are the secondary type, which has their benefits and drawbacks. Like a credit card, these loans provide you with a pipeline of capital. The major difference is in these loans’ basis with your home’s current value. Once a company, such as Mortgage Zilla Group, observes your current home equity, a loaner can provide you with a stream of income to tap into as you please. Interest, only applied to the amount of money that is withdrawn from the line, lets you only pay fees on what you spend.

Lastly, there is a combination mortgage and credit plan. This loan, typically used to provide a small amount of cash influx with the mortgage, provides a backup credit line to place additional expenditures on. In this way, you can use a minimum set amount, in the form of a mortgage, adding additional capital with a line. Mortgage + credit plans are the most flexible, often reducing the overall interest payments substantially.

Valuing a Loan

Standard mortgage add-ons provide a substantial amount of money, valued from home equity. As mentioned above, calculating these loans subtracts current mortgage balances from 80% of your appraised home value. In this way, the remaining value can be loaned and paid back consistently with consistent interest.

Credit lines are much easier to calculate, with a pipeline of capital worth 80% of a property’s market value. These lines have different interest rates depending on the amount of capital withdrawn, and the amount paid back. Through lines, you can save money by paying back the credit used on time, preventing interest from activating.

Lastly, mortgage and credit plans provide a balanced loan, on average allowing homeowners to leave only a 5% down payment to work on any improvements. All these costs are dependent on market conditions and current rates however, both are monitored by the experts at Mortgage Zilla Group.

Applying to the Best Home Renovation Loans

Many first-time renovation-loan borrowers immediately turn to their nearby bank, asking for their lowest interest rate loans. The issue lies in the large structure of most banks, something that prevents you from often getting the best rates and deals on your contracts. Mortgage Zilla Group takes care of connecting you with the best loans, saving you money and time. Our experts look through the top Canadian loaners, providing you with the best rates and conditions.

Valuing a mortgage add-on and a credit line can be exceedingly difficult, with loan offers often being undervalued depending on the loan provider. Mortgage Zilla Group will take care of making sure that you get the loan for your project, with the rates that you can use to their fullest.