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7 tips for making a renovation budget

20 April 2018 by National Bank
budget renovation

Home renos can make you want to think big. But for the endeavour to be feasible, you need to create a budget and make sure your project stays on track. Here are some tips on how to keep your expenses under control.

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1 Estimate the value of the work to be done

Always keep resale value in mind when you’re planning your budget. For instance, a kitchen represents 10% to 15% of the overall property value. If you want to upgrade it, limit your expenses to that proportion of the value of the house. So, for a residence priced at $300,000, renovation costs for the kitchen should be anywhere from $30,000 to $45,000.

If you upgrade the bathroom—another room that increases resale value—calculate 5% to 10% of the property value. According to the Reno-Assistance service, that can mean anywhere from $12,000 to $25,000 to renovate a standard bathroom.

Remember that some renovations add more value than others, so don’t spend a large part of your budget on skylights or having a pool put in.

2 Plan all of your expenses

The cost of labour often accounts for half of the overall renovation expenses, and even more if the work ends up being more complex than anticipated. That said, don’t go thinking that you can do it all yourself: Some tasks are better left to the professionals.

A general rule of thumb is to keep around 10% of your renovation budget for unexpected expenses. That way, if you’re renovating your kitchen and you discover that you need to redo all of the electrical work, you have the wiggle room in your budget to do it.

When you’re doing a home renovation project, don’t forget to get a permit from your municipality. Keep in mind that some interior work, like renovating a kitchen or bathroom, usually doesn’t require one.

When it comes to permits, some municipalities have a fee based on every $1,000 in estimated renovation costs. Other municipalities charge a fixed price for permits, which generally comes out to a few hundred dollars. Given the variation in prices, it’s best to check the regulations in effect in your municipality.

3 Avoid major renovations

Do you really need to move a wall? If you leave it where it is, you’ll save $3,000 to $5,000. If you can avoid redoing the ceiling and walls in general, you’ll keep your renovation costs significantly lower. Installing faucets in the same place in the bathroom is another great way to save you from unnecessary expenses.

4 Do some of the work yourself

Do you know how to use a paintbrush and a roller? Then go ahead and repaint the walls of your home yourself: You’ll save more than $1,000 per room!

5 Save on your biggest expenses

You don’t have to say no to all things high end. But be on the lookout for small, unnoticeable imperfections that could help you save a lot. An appliance with a little scratch could lead to a big discount, even if the mark isn’t visible.

6 Secure financing

So, you’re all set to renovate, but you don’t have the money lined up to do it? Consider financing solutions like the All-In-One line of credit that lets you leverage your home equity to finance renos, all with an advantageous interest rate.

You can also opt for a personal line of credit, which enables you to access to the funds at any time and enjoy a lower interest rate than most credit cards.

7 Take advantage of government renovation grants

To reduce renovation costs even further, see if you’re eligible for government grants. The RénoVert tax credit encourages people to invest in eco-friendly home renovation work and corresponds to 20% of the portion of your qualified expenditures that exceeds $2,500, up to a maximum amount of $10,000. You could use it to install an Energy Star Air-Source Heart Pump or a green roof.

If you’re planning such home renovations, it’s best not to doddle: The RénoVert tax credit is available until March 31, 2019.

Now that you have everything you need to make your renovation budget, it's time to start planning!

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