If you love your neighborhood, but your Calgary home doesn’t meet your needs anymore, it might be time to consider renovating. While taking on a renovation project certainly requires planning, by sitting down to discuss your needs with a mortgage broker you can often find ways to use your existing equity to make your dreams more affordable. In fact, when you consider some of the costs associated with buying a new home, such as larger payments, impacted savings, legal fees, realtor commissions, or an increased commute time, making your old home new with some well-planned improvements is the smartest move you can make.
Renovation Benefits: Plan for the Best Return on Investment (ROI)
Deciding to renovate is the easy part. Understanding your options is the next step. You may have a clear idea of everything wrong with your home, but an experienced mortgage broker who knows the Calgary market can help you decide which renovations are the best ones for your home. When it comes to serious home improvement, it is important to know which changes provide the most value.
We all want to get the most out of our investments, and home renovations are no different. Did you know that kitchen and bathroom renovations both have the potential to provide a 75 to 100 per cent ROI? Simply painting (inside or out) offers a 50 to 100 per cent ROI. All of the following renovations only offer average ROI.
|Adding a rec room||50-75%|
|Adding a garage||50-75%|
|Adding a deck||50-75%|
|New central air conditioning||25-75%|
No matter what part of your Calgary house you are renovating, your mortgage broker can help you get the most from your money. By making smart design choices, you can maximize your investment.
Kitchen – Make it the centre of your home, not just a place to cook. By taking out walls separating the kitchen from the eating area, you can give your home a more open feeling that will also appeal to future homebuyers. Use lighting with dimmers to warm the room. Design your kitchen around the refrigerator-sink-stove triangle and include an island if there is enough room. Replace or paint kitchen cabinets and add modern hardware. Add countertops made from natural stone, like granite. Be sure to upgrade outdated, brightly-coloured appliances with energy efficient models.
Bathroom – Lighten up your bathroom with warm lighting to keep a fresh, new look. Maximize space by using a pedestal sink and a more compact toilet. Consider heated flooring. Repaint cabinetry and upgrade the hardware.
Painting – One of the most effective ways to increase a home’s visual appeal, painting is something most homeowners can do on their own with a limited investment. Neutral, warm tones like cream, gray, mocha, and soft green are popular with designers (and buyers). They’re also much easier to paint over than bolder colours that can also make a home harder to sell.
By making your home more energy efficient and safer, you can add value and save money on energy and insurance costs.
- Energy-efficient furnaces, air conditioning, doors, and windows
- Low-flow, dual-flush toilets
- Improved insulation
- Ceiling fans
- Wired smoke and carbon monoxide detection systems
- Home security system
Once you have decided what type of renovation most benefits your needs and your home, then it’s time to think about the most affordable way to pay for it. By sitting down with a broker who has Calgary mortgage planning expertise, you can make your old home new again and manage renovation costs through your mortgage.
Renovating your home makes it more personal and ensures it will meet your needs for years to come, but to get the greatest benefits from a renovation, you need to look at the larger view and decide how you can get what you want out of your home and appeal to future buyers. The key to a successful renovation is doing all this within a budget you can afford, and that how the expertise of a Calgary mortgage broker fits into the big picture.
Plan to Sell
By approaching renovations strategically, you can enjoy your “new” home and get the most for your money later on when you decide to move. Renovating will likely help your home sell faster, but if your home’s new value is higher than the average of those nearby, you can expect a lower return on your investment. Likewise, if your home is under the average, you will probably see a higher ROI. The secret to successful home renovation is to plan make sure your home’s value goes no higher than 10 to 15 per cent over the median sales price of comparable houses in your neighborhood.
Home renovation requires careful budgeting. Your Calgary mortgage broker can provide useful advice when you are planning your budget by advising you on what will hold the most value for future homebuyers as well as suggest ways to help you finance your plans.
Before beginning a renovation project, be clear on how much it will cost. You should get cost estimates from at least two local contractors experienced with the type of renovations you have in mind. And because life is almost never predictable, budget about 10 to 15 per cent extra for unexpected expenses.
Smart Renovation: Using your home equity
If you have lived in your Calgary home for a while, you have probably built up considerable home equity. Your mortgage broker can show you how to use this equity to pay for renovations on your home by refinancing or obtaining a home equity line of credit.
Refinancing – Because interest rates are currently so low, refinancing might get you a lower mortgage rate than you had previously. Cash-out refinancing lets you replace your existing mortgage for more than you owe, so you can use the “extra” for renovations. Read Refinancing Your Home for more information. By working with a Calgary mortgage broker, you might even be able to consolidate some debt into your refinance, which will save you even more money on interest costs while you add to your home’s value.
Home Equity Line of Credit (HELOC) – This type of line of credit makes available the full amount you need, but you only pay interest on what you have used. This can be especially helpful if your renovation will take an extended period and you will be paying contractors in stages. You will be able to borrow as much as 75 per cent of your home’s current value, and the rates are often lower than credit cards or other loans.
Home renovation can seem like such a huge undertaking that it would just be easier to move, but when you work with an experienced Calgary mortgage broker you can count on professional advice from an expert who understands the market. She will help you develop a plan and budget to turn your old home into your dream home. Contact Mortgages by Candice to learn more about how to put your mortgage to work and start planning your renovation today.