Keep Home Renovation Costs from Breaking Your Budget
Home renovation costs can be hard for anyone’s budget. Maybe you’re planning to live in your house for a while, or maybe you want to raise its selling value. Many people start reno projects with great ideas and clear goals. However, you only have to search online or ask an experienced friend to see how even the best plans can fail. Here are some tips to remodel without breaking the bank:
Identify Your Renovation Project and Shop Around for Good Prices
First, figure out what renovations you’re making to your home. Then shop around for the best price and value for what you want. Get several price quotes from different stores and/or contractors, check online reviews, call references, and view samples or tour finished projects if possible. Also talk to friends and neighbours who have recently done home renovations. Ask what went well and what they would do differently next time.
This will let you see where you can save money and where it’s worth spending a little extra. It’s okay to break your dream renovation project down into smaller projects so that you don’t break your household budget. Hold off on opening your wallet until you have all the information you need.
Think Twice About DIY Reno Solutions
Doing part or even all of the renovation yourself can save a lot of money on labour. However, investing sweat equity means you’re saving money at the cost of your own time and responsibility. Ask yourself these questions to help decide if a DIY (do-it-yourself) solution for your renos is right for you:
- Do I know how to do this myself safely and properly?
- Will my renovation follow applicable safety codes and bylaws?
- How will doing the renovation work myself impact my home insurance?
- Will I be able to keep up my other time commitments while working on the reno (e.g. work, family, and volunteering)?
- Could doing this myself hurt my relationship with my spouse or others living here?
- Do I have a plan in case something goes wrong?
Starting a project and then realizing you’ve messed up and can’t finish it will be an expensive lesson. Talk to any tradesperson and they’ll tell you that it’s always a lot more work and cost to undo someone’s home reno than starting themselves from scratch. If you’re not completely confident in being able to make the home improvements yourself, then call a professional. The higher cost now will save a lot more in the long run.
Use Mortgage Insurance and Tax Credits to Help with Renovation Costs
If you’re buying a home and are planning to do renovations right away, talk to your mortgage lender before your purchase is finalized. For example, both CMHC and Genworth Canada have programs to add renovation costs to your mortgage. It’s also worth looking into provincial and federal tax credits. While tax credits won’t put cash into your wallet, they will benefit you when you file your income taxes.
Budget for Renovation Costs and Unexpected Expenses
The cost of a home renovation can break your budget if you’re not prepared. According to a 2019 CIBC poll, Canadians planned to spend around $10,000 on average for renos. What you can spend depends on your own budget. One choice to make is whether you’ll use your savings or borrow money from credit sources like a home equity line of credit. Going into debt will of course bring its own list of problems, but so will leaving the job unfinished because you ran out of money. A blended budget that uses both savings and borrowings might be your best strategy.
If you’re okay with putting off renovations until later, then you can always set a saving goal to come up with the money you need. Your remodeling might be finished in a few days, but that doesn’t mean you need to save all the money for it in that time too. The farther you think ahead, the easier it will be to build your renovation fund. For example, if you put away $50 a week, then in 2 years, you’ll have $5200 to spend!
Unfortunately, even if you know exactly what you want to renovate and got your price quotes for it, things could still end up costing more than expected. Just as it’s a good idea to have emergency savings ready for life’s unwanted surprises, you want to leave some room in your renovation fund for extra expenses. Also, decide before you start renovations what you’ll do if you go over-budget. This will help you not give into emotions if a problem happens.
How to Save Up for a Big Expense
Balance What You Want with What Your Home Needs
Everyone wants their home to be a certain way for themselves and their families, but that shouldn’t come at the cost of what they need. It’s not worth buying stainless steel appliances and running out of money for necessary home maintenance. If you live in a strata building or complex, with insurance rates as high as they are, it can be worth spending your renovation dollars on upgrades and maintenance before the creature comforts. A new kitchen is great, but if the roof starts to leak, then it will be hard to cook. It’s also important to keep balance in mind. For example, if you spend everything on renovating your bathroom, then what about the other rooms, the hallways, and the outside of the house? Will the bathroom still fit with the look of everything else, or will it seem awkward and out of place?
Before you get what you want for your home, make sure you know what your home needs. Take care of those needs first. If you have money left over, then you can put that towards new gadgets and styles.
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What to Do When Home Renovation Costs are Breaking Your Budget
Renovating your home into one that you and your family loves is a great feeling, especially when you don’t have to stress about the costs. However, if you’re facing an unexpected bill after doing your renovations or need extra support with budgeting, a credit counsellor at a non-profit credit counselling organization can help. They will be happy to review your situation with you and help you solve your difficulties so that you can enjoy your improved home.