How to finance home renovations in canada
As with any big-ticket purchase, there are different ways to finance a home renovation. It’s common to pull from your savings to pay for any upgrades on your home. In fact, as of October 2021, a Bloomberg and Ratesdotca survey found that 59% of Canadians used savings to avoid taking on additional debt to make changes on their homes.
Your savings aren’t your only option. Here are a few more, but each will have additional costs, including interest, depending how long it may take you to pay off the borrowed money.
- Mortgage refinance: This option involves breaking your mortgage and taking out a new one. The amount you borrow is rolled into your new mortgage payment, so you don’t have to deal with a separate loan or line of credit payments.
- Home equity line of credit (HELOC): A revolving line of credit that is secured by the equity in your home. As you make debt repayments, the amount you can borrow again increases.
- Line of credit: Another form of revolving credit. The big difference is that a line of credit may or may not be secured, like with a HELOC.
- Credit card: You should always avoid financing large expenses with high-interest forms of debt. However, in some cases, a credit card may be suitable. Some credit cards, like Tangerine Money-Back Credit Card, offer cash back or perks on home improvement expenses.
While renovations can be expensive (remember the shortages of wood in 2021, raising its costs?), they do add value to your home’s equity and value. Depending on your financial situation and goals, you’ll want to consider the return on investment before getting started.
Read more on ways to finance a home renovation in Canada.
How to hire contractors and save money on home renovations
Some people can do renos themselves or are connected with contractors as family or friends, which can help save a boat load of money. But not everyone is comfortable around a table saw or electrical wiring. Completing a home reno doesn’t require spending a fortune, even if you’re not the handiest person around. There are plenty of ways to cut costs, while still sticking to your project goals.
When interviewing contractors and/or getting quotes, ensure you hire someone who’s transparent about fees and is realistic about project costs. Ultimately you want someone willing to help stay on budget. The right person or company will answer questions you might have about sourcing and delivering materials. Renovation supplies come at a variety of price points; a good contractor can offer guidance on maximizing your return on investment. They should also be able to help you with deals on good quality appliances and fixtures, and recommend the smaller tasks you can do yourself. For example, demolishing and cleanup, material pickup, and more can save you some dough if you do it yourself.
Read more on how to save money on home renovations.
Take advantage of home renovation grants and tax rebates
A home renovation project can cost a lot of money—often, more than many may expect. For that reason, you’ll want to get familiar with the municipal, provincial and federal grants and rebates available in your area. These incentives are generally geared towards home improvements, such as window replacement or furnace upgrades, that help make your home more accessible or energy efficient.