Remodelling the kitchen? Adding another bathroom? Redoing the backyard? Whatever your renovation project may be, you have to make sure you’re prepared. How? By making a realistic renovation budget for your home renovations. Here is our expert advice for getting an accurate estimate of the cost of your renovations, as well as some tips to help you save.
You may be considering several different renovation projects for your home, but because there’s a budget, you have to choose wisely. Focus on the most pressing work, then think about what will add the most value to your home. That way, your renovations will become an investment.
Conduct a full inspection of your home and make a list of all the renovation work you would like to do or should do. If needed, get help from a building inspector, contractor or architect, as they have the expertise needed to figure out what needs to be repaired or redone. If you just bought an older house, you can check the pre-purchase home inspection report, which outlines all the work that needs to be done.
Before attending to how your house looks, you should focus on improving your property’s sealing, isolation and energy performance. This may include:
These elements are invisible, but crucial to your comfort. Plus, these improvements will help keep your home in good shape.
Renovations that pay off
If there aren’t any urgent repairs, some types of renovations pay off more than others. Prioritizing the right kinds of improvements will increase your chances of getting a better return on investment when you sell your house.
The Appraisal Institute of Canada listed the top five renovations with the highest return on investment, which are:
You may also consider renovations that will improve your comfort and the home’s use and convenience, like finishing the basement, furnishing the backyard, adding a sunroom or a patio, etc.
While clearly visible, contrary to more pressing work, esthetic renovations add little value to your home. These include redecorating, or adding a fountain or new shutters in front of the house. That being said, if there isn’t any critical work that’s needed and you have the money for these kinds of renovations, then go for it.
Keep your home’s resale value in mind when planning your budget. For example, the kitchen represents 10% to 15% of a property’s value. If you want to renovate it, limit your expenses to that proportion of the home’s value. If a house is worth $300,000, renovating the kitchen should then cost $30,000 to $45,000.
If you’re redoing the bathroom, which is another major part of the home that can increase its resale value, calculate 5% to 10% of the property’s value for your budget. That means you can expect to spend $15,000 to $30,000 to renovate it entirely.
Always remember that some kinds of renovations pay off more than others; avoid spending most of your budget on the wine cellar or on a new pool.
There are two ways to calculate the cost of your renovations:
Plan all of your expenses
Your renovation budget will hold up if you think of all the expenses incurred by the work, beyond the tools and materials.
Tip: No one is safe from an increase in the cost of materials, like lumber, doors and windows, or in the cost of labour. If you made your budget months in advance, reconfirm the costs before diving in.
Take advantage of government renovation grants
You can reduce the cost of your renovations by taking advantage of grants offered by different levels of government.
Research what’s available in Canada and in your home province. Don’t forget to check what your city may offer, too.
Programs, grants and tax credits are often available for renovations aimed at optimizing a home’s energy efficiency, like replacing old windows or a heating system that uses oil, for example.
If you have mortgage insurance with the CMHC, please note that they also offer an incentive to optimize your energy efficiency.
Tip: If you aren’t a professional with a permit or a warranty, please note that this may have a negative impact on the resale of your property.
There are many financing options for your home renovation projects.
Now that you’re better equipped to make your home renovation budget, all you have to do is meticulously keep track of your expenses throughout the project. That way, you’ll enjoy your renovations even more once they’re done. We’re here to answer your questions.
Explore financing solutions for your renovations.
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