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Renovating Your Home
Are you considering a summer renovation project? You may want a new roof, new siding, stucco, or jewel stone. Perhaps a deck, or a pool put in your backyard. Or maybe your renovation need is to retrofit your home, with upgraded insulation, heating and cooling systems. Whichever project is on your mind, commencing your project means preparation.
The planning stage:
CMHC (Canada Mortgage And Housing Corporation) offers a comprehensive checklist to get you started.
| House Assessment Worksheet | ||
| Present Condition / Problems | Renovation Priority | |
| Foundation | ||
| Basement Ceiling or Main Floor Structure | ||
| Heating, Cooling and Ventilation System | ||
| Electrical Service and House Wiring | ||
| Plumbing and Fixtures | ||
| Floors and Stairs Structure/Finishes | ||
| Wall and Ceiling Structure/Finishes | ||
| Kitchen | ||
| Bathrooms | ||
| Attics | ||
| Roof Structure/Finishes | ||
| Exterior Wall Finishes | ||
| Windows and Doors | ||
| Other | ||
Prior to completing the last column of the worksheet above, consider the following information provided by the Appraisal Institute of Canada:
Payback Range of Typical Renovations
- Bathroom Renovation (75-100%)
- Kitchen Renovation (75-100%)
- Interior Painting (50-100%)
- Exterior Painting (50-100)
- Roof Shingle Replacement (50-80%)
- Furnace/Heating System (50-80%)
- Basement Renovation (50-75%)
- Recreation Room Addition (50-75%)
- Installing a Fireplace (50-75%)
- Flooring (50-75%)
- Constructing a Garage (50-75%)
- Window/Door Replacement (50-75%)
- Building a Deck (50-75%)
- Central Air Conditioning (50-75%)
To finance a revovation project you may decide to use personal savings, lines of credit or credit cards. Should you not have savings to utilize, be wary of putting your renovation costs on high interest accounts. “Do Not Pay for 1 Year” store accounts are a prime example of account types which can be difficult to pay off in full prior to promotion expiry, and the balance is paid on for years later.
Should you intend to sell your home post renovation, it may make sense to finance it. Research the renovation cost and return expected. Find out if your home is marketable, meaning sales within your neighborhood, of homes similar to yours, have sold within a reasonable timeframe. A realtor would be able to help you gather this information.
If you are not renovating to sell, you may consider financing the work with a secured line of credit. Most banks and some credit unions offer secured lines of credit with low interest rates to clients with good to perfect credit, and available equity. If your bank doesn’t offer the financing your looking for, you can switch your mortgage (as long as you have been in your current mortgage for a minimum of 6months) to a different lender. The new lender may cover some of the costs involved in switching the mortgage. An alternate suggestion by your bank may be to refinance your current mortgage with the expected costs of the renovation, and give you a lump sum to complete the work. This is not ideal for renovations. Once your renovations commence, you do not know the unforseen costs which may arise mid way thru the project. A secured line of credit gives flexibility to not only cover the costs as they come up, but also pay back in lump sums without penalty. An additional advantage is that until you withdraw the funds from the secured line of credit, you are not paying interest on the money. You will only pay interest on money withdrawn.
The topic of renovations is vast and cannot be covered within 1 blog, but only touched upon. Blogs to further explore the financing of renovations, costs involved and helpful tips will be posted in the future. Until then, the key point to remember: Take time to research all aspects of your project before starting it.
———————————————————————————————————— Related Article: $23 Billion Spent On Home Renovation in Canada———————————————————————————————————–
