To create more useable space; to make it more energy efficient; to enhance its value: there are a lot of reasons for renovating a home. Millions of Canadians tackle a home renovation project each year and, if you’re one of them, here are some important tips.
- Make a plan and stick to it: Figure out what renovations you want to do and why. Then, plan for them. If your goal is to increase the value of your home, a real estate agent can help you determine the renos that will get the best return on your investment.
- Budget accurately: Once you know what you want to do, create a realistic and affordable budget. It’s not unusual for extra expenses to crop up, so set aside a contingency fund of at least 10% of your budget.
- Know where the money is coming from: It’s important to know your financing options. You could access a secured or unsecured line of credit, or refinance a mortgage or a personal loan – but the best financing option of all is to set up a savings plan or use money you have already saved specifically for your renovations.
- Sweat equity is a great way to save money – but only if you are confident you can do the work yourself.
- Government support may be available for projects such as improving the energy efficiency of your home. Local utilities may also offer grants or rebates.
- Research, research, research: If you’re using a contractor, choose carefully. Get recommendations from friends, co-workers or relatives, be sure to get multiple quotes and a reasonable price, and always ask for references and always check them out.
- Check to see if you need building permits for your renovations: If you live in a condo, check with your building’s management for any approvals you may need.
If you’re renovating to increase the value of your home, keep in mind that some improvements offer better returns than others. In any case, how much you spend should depend on where you live, as well as how long you plan to live there. For example, the value of an over-the-top renovation in a lower-cost neighborhood may not be recognized by potential homebuyers. On the other hand, a renovation that improves energy efficiency may not only lower your operating costs and pay back your investment over time; it can also be a selling feature.
To be sure you’ll have the money you need for the renovations you want – and for all your other life goals – talk to your professional advisor before you start.
Date reviewed: June 9, 2014
This column, written and published by Investors Group Financial Services Inc. (in Quebec – a Financial Services Firm), presents general information only and is not a solicitation to buy or sell any investments. Contact a financial advisor for specific advice about your circumstances. For more information on this topic please contact your Investors Group Consultant.