Financing, in a way, goes hand in hand with the previous blog. It is important to remember that when the job is done and your newly built space is ready to use, it must be filled with the necessary appliances, furniture, electronics, etc. This allocation of funds is almost always forgotten, and many are left stuck with the beautiful, but empty, space, and a depleted budget.
A budget is something that is often based on what is seen and does not include what we refer to as “hidden” costs. For example, consider an excavation for the foundation that happens to unearth a buried oil tank. This is something that can happen unfortunately and it means that the soils around it need to be tested. If they come back positive for contamination, then there now is a process to remove the contaminated soils, requiring time and of course, money! Depending on the age of the home, an asbestos test may be necessary and that too could come back positive – adding another hidden cost.
When you set your budget, consider all these factors and you’ll be able to better evaluate whether financing is needed!
Ways to get the financing:
1. A Bank: They work on draws and generally 3-4 for the complete project and won’t release the final draw until the building permit is closed
2. Private lenders: they’ll shop the industry for the best rates for construction loans, some work with up to 6 draws
3. A family member or friend: borrowing the money from a personal connection can save you from lender interest rates and debt
Do you have any experience with financing a home renovation project? Would you recommend it or advise against it? We’d like to hear from you in the comments!