Magical Credit Blog

What are home renovation loans?

As the advent of COVID-19 has increasingly pushed people to work from home, more and more folks are motivated to improve the aesthetic or other aspects of their home now that they are spending most of their time in it. But home renovations don’t just have to be about making cosmetic updates, they can be strategic too. Some people might look to add a section to their home (with requisite permits of course) - this section can increase the square footage of the home and/or be used to rent to a tenant, and unlock a new income stream. Other people might pursue strategic repairs. The bottom line is that several factors can drive people to pursue home renovations. However, home renovations can often be expensive. This is where the concept of the home renovation loan comes in.

Home renovation loans come in a variety of structures. In this article, we will explore the most common types of loans, and discuss the advantages and factors to consider for each one.

You may have encountered this situation before. You require funds for an impending expenditure, but you realize you may have a shortfall for a number of possible reasons. At this point, you have a few options available to you. You can approach a bank or a lender for a loan, you can ask a friend or family member for help, or you can sell off certain assets you own to raise some funds. Depending on the amount of funds you need and the timeline by which you need them, each option may be more or less attractive. However, assuming that you have the luxury of time and find yourself needing to borrow a sizable sum of money, which way do you go? Lender or family?

A bad credit loan is essentially a short-term loan provided to a borrower with a poor credit score or previous credit history. While it is not intended to be used by someone with an average to good credit score, it is a useful tool in helping someone with a lower score get back on their feet. These loans come at a cost though. Because of the higher perceived risk that the lender is taking by lending to a borrower with poor credit, these loans are often priced at higher rates than conventional personal loans offered by banks and other financial institutions. To this end, it is important to assess the feasibility and economics of a bad credit loan before signing on the dotted line.

In our society today, the credit report is a critical document that records your financial profile from a debt borrowing and repayment standpoint. By aggregating all your outstanding debts together in one place, the report enables the user to see how well the borrower has managed to repay debts on time across multiple accounts. These accounts include everything from credit card bills, personal loans, and auto loans to student debt, revolving lines, utility payments, and even telecommunications bills. Mortgages may also be included depending on the credit agency used. All of this information is then put together into a single three-digit score called your credit score which ranges from 300 to 900 (with 900 being the best score you can get).

Credit, it’s a term that you tend to hear more often now than ever before. With Canadian families struggling under the weight of financial pressure more than ever before, loans are more and more commonly used to stave away landlords and bill collectors. Whether that be unforeseen childcare expenses for extracurriculars or an emergency medical expense that isn't covered by your OHIP plan or even potentially legal fees for an extended trial, loans are becoming more essential than ever for the average Canadian.

A loan is essential if you have a sudden expense that you need to cover. In fact, a recent Finder survey found that more than nearly two-thirds of Canadians have taken out a personal loan in the past. In this lies the advantage of personal loans as unlike with other credit such as bank loans or mortgages, the purpose of your loan isn’t disclosed.

Loans have become incredibly important in our modern daily lives of spending. Everything from overdue bill payments to unforeseen childcare expenses, numerous medical expenses not covered under your OHIP or even legal fees are all funds that cannot be ignored. However, at the same time, the funds required to pay off these necessary expenses can’t simply pop out of thin air.