Refinancing for a renovation project
Before touching the mortgage, we add it all up: the work budget, the penalty, the fees, and the new balance.
Situation
You want to finance renovations without losing sight of what your current mortgage already costs you.
The starting figures
- Indicative value
- $640,000
- Current balance
- $352,000
- Estimated work
- $95,000
- Contingency
- $14,000
What the figures tell us
The amount to finance isn’t just the sum of the quotes. I add the contingency, the possible penalty, and the fees, then I show you what the new amortization does to the total cost.
Options to compare
We compare your available savings, separate financing, and a refinance, with the penalty, fees, new payment, and amortization all in the calculation.
The trap to avoid
A lower payment achieved by stretching the amortization can hide a lot more interest. I always keep the payment and the total cost side by side, so you see both.
The decision to make
Two questions to settle: whether the project justifies replacing your current loan, and how much to hold back for overruns.