Life is expensive — and so are renovations! When it comes to fixing, updating or remodelling your home, it’s important to use your money wisely.
To get the most bang for your buck, here are four renovations to prioritize and four ways to pay for them:
Renovations to help add value
1. Fixing what’s broken
The first priority when renovating should be to protect your investment. If the roof is leaking and threatening to stain your ceiling, weaken the foundation or cause other expensive damage, it’s time for a new roof. If your furnace is unreliable or appliances don’t work, it’s time to replace them.
Many older homes have wooden windows that can rot over time not give you sufficient insulation. Installing energy efficient windows can help you save money on heating or cooling your home, and may offer better protection against Canada’s winters. Some experts also recommend tinted windows if your home is facing west to help keep it cooler.
3. Fixtures and walls
Renovations don’t have to cost an arm and a leg to add value. Simply updating wall colours can make a huge difference in the look and feel of your home and be a cost-effective refresh. Modernizing light fixtures, door handles, mouldings and trims can also give your home a modern boost.
4. Kitchens and bathrooms
Most time inside the home is spent in two places: the kitchen and the bathroom. So updating these rooms will have a huge impact on your enjoyment of your home — not to mention add value.
If you want a new look for less, look into changing kitchen cabinet facings or pulls rather than gutting the whole space. If your budget allows, however, most designers agree that money spent renovating your kitchen is money well-spent.
The RBC Home Value Estimator can help you find out the current estimated value of your home and which type of renovation could add the most value.
Ways to finance your renovation
So how will you pay for your reno? The size and cost of your upgrades will in part determine your financial options. Here are four ideas to consider.
1. Get a home equity loan
If you have equity in your home, then a home equity loan could be a great option, as this type of loan — secured against your home — often comes with lower interest rates than unsecured personal loans, as well as higher credit limits. With a Home Equity Loan, you’re putting the value of your existing property to work for you. You can take one out on any property you own, it doesn’t have to be the same property that you’re renovating.
2. Refinance your mortgage
If you bought or built your home years ago, it might have appreciated in value significantly. You may be able to access that additional value by refinancing your mortgage. So long as you leave 20 per cent of the equity in your home, you can get cash back equivalent to the difference between your home’s current value and your current mortgage amount.
3. Consider a personal loan
If you’re financing a smaller renovation, a personal loan might be a good option, as you can choose a term that aligns with your project timeline and make payments according to a schedule that works for you.
4. Use your savings
Dipping into your savings can be a great way to pay for renovations — but not everyone has enough money available in a rainy-day fund to pay for a major overhaul. Also, you might not want to deplete your emergency fund. If you do use some savings, be sure to keep enough aside for unexpected expenses.
This article is intended as general information only and is not to be relied upon as constituting legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. Information presented is believed to be factual and up-to-date but we do not guarantee its accuracy and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by Royal Bank of Canada or any of its affiliates.