Q. I have an existing line of credit with an available limit of over $300,000. Are there any issues with drawing down on my line of credit to fund my home renovations?
A. If your existing line of credit is secured against your home (that is, the property which you intend to renovate) and your renovation plans include structural changes, then you really should first speak to your lender.
Let your lender know what you intend to do and get their okay. More than likely the terms of your loan agreement will stipulate that you must not carry out structural changes to your home without your lenders consent.
At the end of the day – it is the property that your lender holds as security for the loan. So they have every right to be particular as to what is done to the property. It may be that your lender will be fine to lend you the money for the renovation, however they may well insist on the loan being a construction loan.
This way the lender can ensure that sufficient funds are always available to complete the construction.
The last thing the lender wants if to be left holding a half-constructed property.
It can be confusing to know whether to get a variable rate or fixed rate mortgage, and what features are important. That's why it's important to not only check the right rates, but make sure that you're getting the right features in your home loan. Get help choosing the right home loan