There are two main obstacles that may impede your ability to mentally process the purchase of a home that needs work – the vision and the financing.

THE VISION FOR THE NEW SPACE

You may not be able to envision how the space will look and feel. Some brains just aren’t wired for this (my husband’s!!). A good designer can provide 3D colour images of your proposed changes and furniture placement in a room. This helps immensely. 

Today, there are also many online apps that allow you to take a photo of a space and play around with colour and furnishings yourself.I provide all my buyers with a 2-hour consultation with one of my favourite designers at no cost (whether or not you are renovating). It’s really important to me that you love the home you move into and picking wall colours, placing furniture and planning the styling of rooms helps you feel at home so much sooner.

FINANCING A RENOVATION WITH A NEW HOME PURCHASE

How do you get financing to buy a home and renovate it all at once?

In Ontario, there are a few different ways you can finance the cost of home renovations. The right option for you depends on the equity you have in your current home, the appraised value of your home and/or the home you are purchasing, and your overall financial picture. Many lenders will allow you to refinance your existing home to access equity to complete renovations. There are certain conditions you have to meet in order to qualify. 

We used this option when we purchased the home we planned to renovate. A home equity line of credit (HELOC – pronounced hee-lock) provides you with a line of credit that is secured against the equity in your home. You use as much as you need, when you need it, and can pay it back at your own pace. You only pay interest for the money borrowed for the time period that it is borrowed. 

You can usually access up to 65% of the appraised value of your home, depending on the amount outstanding on the mortgage. Another option is a purchase plus improvement mortgage. The cost of renovations is rolled into the mortgage. The current ceiling on the renovation portion of this type of loan is $40,000, which today would not cover any major renovation. 

It would be a great option to do a simple basement finish or a bathroom upgrade. In this case, you will also need to meet certain conditions to qualify. Other financing options that you may want to examine, depending on your financial situation, include credit cards, personal loans or lines of credit, though these typically have higher interest rates.