It is both an exciting and daunting endeavour to take on a home renovation project, which is why careful budgeting and research is so important before beginning. It is important to keep a few things in mind so that a bit of tweaking does not turn into an unmanageable project.
Don’t underestimate the price tag
Data collected from TrustedPros.ca about more than two million users’ search behaviour and project posts shows that homeowners consistently set unrealistically low budgets for common renovation projects. People see a price range and assume their project can be done on the lower end without consideration for labour costs, size of space, and high-end materials.
Don’t go overboard
A little goes a long way. Many homeowners assume they need to spend the big bucks on upscale finishes to add value to their home. But, home renovations rarely offer a dollar for dollar return. Usually, the best returns are made on the least expensive updates like replacing your garage or front door. Be honest with yourself and don’t think of a reno as investing money when, really, it is spending money.
There are a few things you can do to make sure your vision matches your budget:
Get multiple quotes
Interview multiple contractors before choosing one. Ensure you are both on the same page about costs and expectations.
Stop comparing your home to the ones on HGTV
The magic of TV has led many of us to believe that projects can be done well in just two weeks. In reality, these shows are better suited as sources of inspiration rather than a blueprint of how renovations will be.
Answer questions honestly
Are you handy? If so, you could cut costs by doing some work yourself. But, be honest with yourself. Make sure you really have the skill and time to take on major projects.
Always add more
No matter how well you do your research, there are always extra costs. Most contractors suggest a contingency fund between 10 - 20% just in case.
Like any type of spending, paying for a renovation should ideally be done with savings as you are more likely to stay on budget and avoid debt. Although, there are other options for people who don’t have all the money saved up:
Consider making upgrades with energy efficiency in mind - it is great for the environment and your wallet. You will first need to have an energy audit done, which can cost between $200-1000 depending on your city and home. Once you complete the improvements though, you could get as much as $10,000 back.
Use a home line of credit
The advantage of this type of loan over a standard one is that it is backed by an asset. This allows the lender to offer it with a lower interest, usually prime + or - 1%.
Don’t rely on credit
If you must, you could refinance your mortgage to pay for the renovation. It is not the best option, but it is certainly better than relying on credit cards. They come with much higher interest rates, meaning you pay an outrageous premium.
Putting a project on hold gives you more time to save money giving you more options for your home renovation. It also means not going into debt for something that may likely not give you a return on the dollars you spend. A hasty, under-funded reno could devalue your home and add little benefit to your home life.