Published 16 Sep 2022

RenFi Renovation Financing-Complete Resource Guide

Do you want to make larger-scale repairs or renovations to your homes, such as a kitchen remodel, room expansion, or roof replacement, but lack the necessary funds to get it done? If so, this article will teach you everything you need to know about "renovation financing and loan options in Ontario" and will enable you to make the right decision for your situation. While home improvements have become increasingly popular in recent years, the cost of undergoing them can be relatively substantial. As a result, homeowners who do not have sufficient funds to cover the cost of their home renovation projects may need to consider alternate funding sources.

To that end, more and more Canadians are turning to home renovation financing companies to help them receive the necessary funding and save a substantial amount of money while making their homes more comfortable. Having said that, we've put together this comprehensive resource guide to increase your knowledge and understanding of renovation loans, which will help you to determine whether RenFi Capital Renovation Financing is the best way to finance your next renovation project.

Our goal is to help educate and inform our fellow Canadians of the various aspects of renovation financing. Thus, we hope that by the end of this guide, you will have a greater understanding of what RenFi Capital Renovation Loans are, how to apply, and why you should consider them. Keeping that in mind, our main objective is to simplify the renovation financing process while saving you money.

NOTE: Unlike other renovation financing companies, RenFi Capital specializes in home equity financing for homeowners interested in financing their home renovation projects. To that end, all RenFi Capital Renovation Loans are secured loans, which are secured by your home as collateral.

Table of Contents:

1. What Are Renovation Financing Loans?

2. How Renovation Financing Loans Work

3. Why Choose Renovation Financing?

-Renovation Financing Benefits

4. Types of Home Renovations Eligible for Financing

5. How do RenFi Capital Renovation Financing Loans work?

6. Why Choose RenFi Capital Renovation Financing?

7. How to Apply for a Renovation Financing Loan with RenFi Capital

8. Renovation Financing Loan–Frequently Asked Questions

What Are Renovation Financing Loans?

A renovation financing loan, also known as a "home improvement loan," is a financial strategy that gives homeowners the funds they need to repair or renovate their property and, as a result, increase their property value while making daily life more comfortable. It simplifies and saves money for consumers who have large-scale home renovation plans, such as kitchen upgrades, roof replacements, or even bathroom updates. What’s more, the interest rate on a home renovation loan is often greater than that on a first mortgage. However, it is far lower than that on credit cards and other consumer loans. To that end, this type of loan is often ideal for projects that will cut down on long-term costs or increase a property’s value.

Traditionally, homeowners secure this type of loan through brokers and lenders such as RenFi Capital, on the basis that it is a secured loan for a fixed amount of money borrowed depending on your home equity. Thus, the amount of money you can access using a home renovation financing loan is dependent on how much equity you have in the home. This is the difference between a home’s current market value, less the amount of any liens attached to it, and the amount a homeowner still owes on their mortgage. Simply put, it allows homeowners to use some of the equity in their houses to invest in home renovations and improvements.

NOTE: Home renovation financing loans require you to have equity in your home to borrow against. Therefore, you will not be able to borrow through a home renovation loan unless you have at least 20% equity in your property. As a result, prior to applying for a home renovation financing loan, ensure that you check your equity. When you have less money invested in your house, you run a higher chance of defaulting on a renovation loan.

How Renovation Financing Loans Work

A renovation financing loan works by using the equity in one's home to get the necessary funding for large-scale home renovation projects, wherein the equity in the home acts as collateral for the lender. This means you secure the financing with the value of your home. As a result, obtaining a home renovation financing loan is often a simple process, provided that these types of loans are secured obligations.

What’s more, the amount a homeowner can borrow will be determined in part by a combined loan-to-value (CLTV) ratio of 80% to 90% of the home's appraised value. Of course, the loan amount and interest rate are also determined by the borrower's credit score and payment history, through which the lender does a credit check and requests a house evaluation. Generally, the amount of money you can free up is proportional to the length of time you have owned your home. After that, you may use the funds to finance whatever home improvements are on your wish list, then simply repay your loan through equal monthly installments to your lender.

Many lenders, including traditional banks, credit unions, and non-bank lenders like RenFi Capital, provide renovation financing loans as part of a payment plan to borrowers who are interested in renovating their homes to increase the value of their property. If approved, a home renovation loan provides the borrower with a single lump-sum payment that is returned over a set period of time (usually five to 15 years) at an agreed-upon interest rate. The payment and interest rate stays constant during the loan's term. However, if the house on which the loan is based is sold, the debt must be returned to the lender in full.

NOTE: Keep in mind that before you may borrow against your home's equity, you must first get approval. If you are authorized, your lender may put the entire loan amount into your bank account at once. Additionally, in accordance with the Federal Trade Commission, many lenders do not want customers to borrow more than 80% of their home's equity.

Why Choose Renovation Financing?

Home renovation financing loans are a simple way to get additional funding and may be an effective tool for responsible borrowers. If you have a stable, predictable source of income and know you will be able to repay the loan, low-interest rates and possibly tax deductions make home renovation loans an attractive option for any homeowner.

By negotiating one of these loans, you may be able to convert the equity you’ve built up in your home into cash, which you can then profit from, especially if you invest in home renovations that will increase the value of your home. This may include making your house more energy efficient and saving money by decreasing your energy and water costs, as well as making it more pleasant and safer. The cherry on top is that home renovations often increase the value of your property, which may result in a better home selling price when compared to the cost of the improvements. A newly remodeled house may also make your property more appealing to potential buyers.

To that end, a home renovation loan becomes useful when people have been paying on their mortgage for a long period of time or, better yet, have completely paid off their mortgage. Considering that, these individuals will be able to secure the highest equity to borrow against with lower interest rates and monthly payments than other types of home renovation loans. This makes it easier for borrowers to service their homes. For more information as to the various benefits of home renovation loans and why you should consider them, please read below.

Obtaining a home renovation loan is beneficial in the following ways:

1.  Build Equity

As a result of all the advantages that home improvement projects can bring, some research has found that property values are increased by more than the upgrades themselves cost. Thus, the more renovations you add to your home, the more equity you'll accumulate in its property, and the higher it'll go up in value.

2. Time Savings

Home renovations are a big investment, and it can often seem like such a daunting prospect to get started without the appropriate savings. However, if you were to finance your renovation project through a renovation loan, you would be able to shave off some of the time in which the renovations could be completed. The faster the renovation is completed, the more equity your home builds.

3. Budget Flexibility

Renovation loans enable you to borrow money to fund home improvements, meaning you don't have to come up with the entire amount up front. To that end, it is quicker and faster to raise the amount you borrow than it is to build your savings, which might come in handy if your renovation project goes over budget. Having the funds available to complete the project is preferable to having to stop midway until you have the funds to finish it.

4. Lower Interest Rates

A home renovation financing loan is one of the most cost-effective and straight-forward types of renovation loans since the interest rate and monthly payments are often lower than those of many other types of home improvement loans, making it easier for borrowers to service. Considering that, they use the home as collateral for the loan.

5. Tax Deduction

The interest you pay on home renovation financing loans is tax deductible, but there are key limitations to be aware of before starting. To begin with, the funds must be allocated to significantly renovate the residence that serves as collateral for the loan. These can be defined as renovations that add value to the property, extend its usable life, or adapt the home for a new or different purpose.

6. Return on Investment

Investing in your house is a wise decision, whether you want to sell it or make it more comfortable for you and your family. If you're thinking about selling your home, renovations may help it sell faster and for more money.

NOTE: When considering a home renovation loan, it’s important to note that you are putting your property at risk—if real estate values fall, you may wind up paying more than your home is worth. Additionally, applicants with strong credit will likely have access to the most competitive rates, while those with less-than-perfect credit will pay a higher rate. In general, a credit score of 700 or more will most likely qualify you for a home equity loan, provided that all other applicable conditions are completed.

Types of Home Renovations Eligible for Financing

Home renovation financing is a great option if you know exactly how much you can borrow in terms of the equity in your home and for what purpose. To that end, as a general rule of thumb, borrowing money to repair your house should only be considered if you are convinced that the project will either lower your long-term expenses or raise the value of your property. Some home renovation projects may increase the value of your house by more than the cost of the changes. That being said, a home renovation loan can be used for any type or size of the renovation project. The sky’s the limit! You can pretty much do, add, or change anything you want to your home in order to increase its value. Below, you can find a list of the most valuable home improvements that could be funded by a home renovation loan.

They are as follows:

Attic insulationNew paint and flooring
Basement finishingAdding a new addition
Bathroom updates and remodelingUpgrades to existing plumbing or electrical systems
Front door remodelsRoof or foundation replacement
Kitchen upgrades and remodelingA new deck and/or landscaping

How Do RenFi Capital Renovation Financing Loans Work?

Loan-To-Value (LTV) Ratio: Up to 90% of a home's current value.

Loan Term: 12-24 months

Home Ownership Is Required: Yes

Interest Rates: Interest-only payments are fixed at 1%.

Customers Use : Renovation financing, home repairs, and more.

Is it time to repair or renovate your home? Do you want to make your existing home into your dream home? Have you bought an investment property that must be upgraded before you sell it? Whatever the purpose, home renovations are a great way to increase the value of your home, and at RenFi Capital, we work hard to get you the money you need for your home renovation projects as soon as possible. RenFi uses cutting-edge technology, such as Fintech and Open Banking software, to deliver quick, safe, and secure home renovation financing with interest-only payments fixed at a 1% monthly interest cost. Thus, a $50,000 kitchen remodel will cost only $500 per month! Use our Renovation Financing calculator to estimate your monthly payments.

RenFi Capital renovation financing is one of the most straightforward and cost-effective methods for obtaining the funds you need to renovate your home. With a RenFi renovation loan, you may borrow up to 90% of your present home's worth based on your credit profile, get approved in 15 minutes, and be fully financed in 72 hours. This is achieved through reviewing your credit profile, loan-to-value ratio, and secure quick verification, which allows us to confirm your income and total debt service (TDS) ratio.

We provide RenFi Capital renovation loans, which are granted on the equity in the home and come with a 12-month term. You can also pay back your loan after 3 months without penalty. This means that upon taking out a RenFi Capital renovation loan, it will be secured by your home as a second mortgage. In borrowing money secured against your home equity, we can provide you with a lower interest rate and lower equal monthly payments with more flexible repayment terms than other types of loans would normally permit. Once approved, RenFi Capital will provide you with a single lump sum payment that is to be paid off over an agreed-upon period of time.

Moreover, following the conclusion of your term, RenFi Capital professionals will work to assist you in refinancing your loan with your first mortgage lender via your broker. RenFi can also assist you in obtaining a new first mortgage or renewing your loan. It's entirely up to you! Having said that, now that you understand how RenFi Capital Renovation Financing loans work, we would like to move on to discuss the many reasons why you should consider them. This will help you determine whether RenFi renovation financing is right for you based on your situation.

Why Choose RenFi Capital Renovation Financing?

Home renovations may be an exciting life event. However, many people forgo home renovations because they are concerned that they may not qualify for a home improvement loan. RenFi Capital is the lender for all submitted loans, meaning we can accept and finance your loan quickly! If you are a homeowner interested in improving the value and comfort of your home, RenFi Capital renovation financing is the perfect solution to simplify the financing process. Furthermore, because all of our renovation finance loans are secured personal loans, obtaining a loan with RenFi Capital is simpler and provides higher rewards, lower interest rates, and cheaper monthly payments.

What's more, unlike traditional home renovation loans, RenFi does not require any onsite appraisals or document submissions such as bank statements, mortgage documents, or tax documents, to get approved. Our innovative onboarding process, which includes no onsite appraisals, a streamlined application procedure, and a completely secure digital experience that is 100% confidential, enables us to remove the roadblocks that slow down the renovation loan process. As a result, we guarantee faster approval and funding rates.

That said, when you pick RenFi Capital renovation finance, we'll be there for you every step of the way, from start to finish. This means we'll be there for you from the minute you apply until the loan is fully funded and serviced at the end of the term! Don't just take our word for it, though. Rather, review the numerous additional reasons why you should consider RenFi Capital renovation finance for your next restoration project and come to your own conclusion.

 They are the following:

No Onsite Appraisals or Document Submissions (bank statements, mortgage documents, or tax documents) RequiredStreamline Application Process & 100% Secured Digital Experience
Fixed Rates At 1% Monthly Interest Costs3-minute application process and a 15-minute approval process
Borrow Up To 90% of the Equity in Your HomeInstant Income Verification Straight from Your Bank.
Up to 24-Month TermsFully Funded in 72 Hours
Repayment After 3 Months - No PenaltyFixed Rate for Monthly Payments

 How to Apply for a Renovation Financing Loan with RenFi Capital?

RenFi Capital's simple application procedure is intended to make applying for a renovation loan simple and stress-free. However, it should be noted that RenFi Capital renovation loans are backed by a second mortgage on your house. As a result, in order to apply, you or the co-applicant must be the registered owner of the collateral property.

That being said, when you begin the application process, all we ask for is the name and contact information of the contractor (though a contractor is not required at the start), your property address, and access to your online banking using our bank-grade secure software for income verification. Once we have received the following information, we will examine it in addition to determining the value of your house in relation to the loan amount and your credit profile.

Apply for a renovation finance loan with RenFi Capital today by following these three simple steps.

They are as follows:

Step 1: 3-Minute Application Process

Step 2: 15-Minute Approval Process

Step 3: Approved Funding Amount

Following this process, our specialists will contact you via email with the appropriate closing documents and post-application instructions. Because these are mortgage documents, you and a lawyer must review them. Once the paperwork is completed, your lawyer must return it to us. After that, you will receive your funding within 24 hours of us receiving the closing papers. 

NOTE: Keep in mind that RenFi Capital uses "Inverite" software, which employs 256-bit bank-grade encryption to ensure your personal information stays secure and confidential at all times during the application process. This programme provides us with a read-only copy of your bank account, eliminating the need for you to provide us with bank statements, T4s, employment letters, or pay stubs.

Renovation Financing Loans–Frequently Asked Questions?

Is property renovation a good investment?

The simple answer here is yes. Property renovation is an excellent investment for homeowners who are looking to increase the value of their property while making their homes more comfortable. However, the return on investment (ROI) of any specific renovation project is determined by local market characteristics, the status of the residential real estate market when the property is sold, and the quality of the work executed.

What home improvements add the most value?

Certain improvements, such as the addition of a wood deck, kitchen, and bathroom upgrades, and window replacement, have historically and on average shown the highest ROI, independent of the property's location or the health of the residential property market. However, to completely recoup the cost of construction, renovation projects must correct a design or structural defect in a home.

What to consider before starting a renovation project?

There are a few important considerations that need to be made prior to starting a new renovation project. For instance, when planning any form of project, it is critical to verify that the upgrades are acceptable for the specific type of residence and local property area. Additionally, property owners with sufficient equity in their houses might utilize financial instruments such as cash-out refinancing or a home renovation loan to fund building projects. Lastly, it is essential to consider the return on investment. Certain remodeling projects can increase the value of your home by more than the cost of the upgrades themselves.

Is it better to finance a home renovation or pay cash?

In determining whether or not it is better to finance a home renovation or pay cash, one must consider the overall size and cost of the renovation project itself. For a low-cost project, it may be simpler to independently fund it using cash and save yourself the headache and interest payments of a loan. However, if your cash flow and/or savings are restricted, leveraging your home equity may be a viable alternative to finance your renovation plans, especially if you are planning large-scale renovations, which tend to be relatively more expensive.

How much money can you borrow on a home renovation loan?

Depending on your lender, you can borrow between 80% and 90% of the equity in your property. This implies that if your property is worth $500,000 and you have a mortgage debt of $350,000, you now have $150,000 in equity. Because you may borrow up to 80% of the value of your property, you could borrow up to $400,000, minus what you owe (i.e., $350,000), leaving $50,000 in equity to invest toward upgrades.

How long can a home renovation loan be?

A renovation loan is a one-time payment made to you and secured by your house. Home equity loan periods might range from five to 15 years, depending on your lender. However, it’s important to note that almost all home renovation loans can be tailored to suit your individual needs.

 What if I need to borrow more from my home renovation lender in case of unexpected renovation expenses?

There are no extensions to the amount of money you can receive from a home renovation loan. Considering that, a home renovation loan provides you with a single lump-sum payment based on the equity of your home. Thus, it is important to get plans and quotes to determine the cost of the renovations. That being said, if there are unexpected expenses along the way, you will be required to pay for them yourself. As a result, we recommend putting some money aside.

 Can I use the money I borrowed for anything other than renovations?

A borrower seeking a home renovation loan may use the funds for a variety of purposes, including consolidating credit card and other debts; investing in another property; paying tax arrears or judgments; alleviating cash flow challenges; paying for tuition; paying for education loans; financing travel plans; and more. That being said, because the funds are acquired in one single sum, home equity loans are often selected for larger, more expensive projects such as renovating, paying for higher education, or even debt consolidation loans.

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