14
 591

 Buying then renovating...

How do people afford renovations?

If a person buys a fixer upper, do they have to have the money already to renovate?

Or can you somehow roll the renovation costs into the mortgage?

I guess what I am really asking is, if we buy at $30000 less than the bank is willing to give us, is there a way we can still access/borrow the $30000 to renovate?

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 2 Feb 2010 1:29 PM
 21 Oct 2009
lastone
Postaholic
8,824
We pay for our renos as we have the money for them. The rule is that we pay for all our renos in cash, until we have the money in full they do not get done.

It takes a bit longer but we could not afford another loan payment or a larger mortgage.

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 2 Feb 2010 1:30 PM
 13 Jul 2006
 GVA, wishing it was GTA
tjrocks
Empress of the Forum
30,378
A lot of them take out a line of credit on top of their mortgage. So like we were talking to the bank and have been pre-approved for say, 300k, and we find a fixer upper that's 200k, then we could take the extra 100k as a loan/loc. I would talk to your mortgage broker/bank to see if it's possible.

They're certainly lending less now (the amount we're 'approved' for is significantly less than the amount we were approved for back in '08 when we bought).

What we also did was put in less of a down payment. We took the money out of our 'first time home buyers' plan as it was available and used some of the money we would have used for the down payment as our renovation pool, as the interest on an LOC would have been higher than what the difference was in our mortgage.

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 2 Feb 2010 2:53 PM
 14 Jul 2009
 Ottawa
BandAidChik
Postaholic
9,318
Home Depot credit card. One project at a time on 6 mos no interest smile

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 2 Feb 2010 3:01 PM
 4 Apr 2006
cynful
Devotee
1,336
We've done the renos slowly - it's taken us almost 5 years to do everything we originally wanted to do. We saved some of our down payment for those first renos. We don't like to use credit so everything since then has been as we've saved up the money.

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 2 Feb 2010 3:07 PM
 19 Sep 2005
Ms_Married
Duchess of the Forum
21,087
We are paying for ours as we have the money. Our kitchen reno is currently on hold until we receive our tax refund.

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 2 Feb 2010 3:10 PM
 23 Feb 2006
 Calgary
luinge
Postaholic
5,542
We have been renovating for just over a year. We pay cash for all our projects. We typically take so much money out per pay and that is towards renos. We have no hired anyone to help, that keeps the costs low, but the timeline is longer.

We also tend to buy discontinued items for cheaper (just make sure you buy enough!), we ask about floor models, ect. Our budget to renovate our whole townhouse is $8,000 and so far we are on track.

Renovating a place is a LOT of work, timelines are always blown, but it is so rewarding.

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 2 Feb 2010 6:12 PM
 11 Feb 2008
Lotus_spring
Devotee
2,488
we sold our homes first, held back a portion of profit which was deposited to our bank and mortgaged remaining amount on the home. only 1 mortgage no line of credit

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 2 Feb 2010 8:50 PM
 30 Oct 2004
hopeful_2be
Addict
4,466
If you talk to your bank, you can usually work something out (like a homeline or something similar...)

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 2 Feb 2010 9:15 PM
 28 Jul 2008
 Maritimes
juliagoolia1221
Devotee
1,274
We just sold our house and are purchasing a house that needs lots of work. We are getting a purchase + improvement mortgage to do some of the major renos (garage mainly). Basically if the house is $100k and we need $50k for renos they do the mortgage for $150 and don't release the $50k until the work is done (it can be in one or two draws if needed) and inspected by the bank. It doesn't affect the interest rate the same way a cash back mortgage does, which is a huge seller feature for us.

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 2 Feb 2010 9:36 PM
 23 Aug 2009
 Kitchener, ON
kimb2b
WB Chatterbox
416
We have paid cash for our renovations. It has taken 8 yrs but we did the house top to bottom, well almost bottom, I now what to do the laundry room wink It does take longer but we don't owe anything 'extra' to a bank or cc.

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 3 Feb 2010 10:03 AM
 28 Sep 2007
 Ottawa, ON
Kiouie
Devotee
1,490
Originally the Bank gave us 10 000 cash back upon signing our mortgage so we could do the main things. About a year after, our house had gone up in value so much that we were eligible for a mortgage-secure line of credit. So we are slowly doing room by room!

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 3 Feb 2010 10:13 AM
 9 May 2009
baby_toes
WB Addict
4,972
We did our renos one room at a time. When it came to the big rooms (bathroom, kitchen and siding) we got lucky and came across really big sales (such as 50% off our kitchen cabinets) Some of our renos was put on credit (Home Depot card, love the one year no interest) and the rest we paid in cash.

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 3 Feb 2010 11:11 AM
 11 Nov 2008
 Ottawa
tweet
Addict
4,254
Purchase plus improvements is one of the best ways, especially with the ridiculous low mortgage rates right now.

The other option I would recommend is just straight cash.

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 3 Feb 2010 11:44 AM
 21 Feb 2008
 Edmonton, AB
miss_cait
Devotee
1,683
Thanks everyone!
We don't have a house picked out yet or anything, I was just curious if buying cheap and renovating would be a better option...the purchase plus imporovements mortgage sounds the most like what I was thinking, I'll have to ask my broker about it.

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 31 Oct 2012 11:59 PM
 30 Apr 2012
 buzzle.ca
buzzle
New Member
0

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