Pre-renovation Checklist: What is your Financial Plan?
We sure seem to be in the mood for improvements in this country and our homes are no exception. A recent construction study from Scotiabank suggested Canadians spent a record $53 billion on home renovations last year and that number was actually on par with what Canadians spent on new home builds. In a separate report from BMO, their research concluded over the past decade, renovation spending in Canada has been the single fastest growing segment of residential investment across the whole country.
Knowing that, chances are pretty good you too have done some recent improvements on your house or are in the very least thinking about getting some done. Whether it is fixing up the front walk and stairs or fitting the bathroom with safety guards in the shower, toilet and bathtub to full blown demolition and additions on your home, you need solid plans in place first and it all starts with proper finances.
The Canada Mortgage and Housing Corporation suggests regardless of size, you enter into any renovation project well informed on all aspects of impending construction to help it go that much easier and hopefully, stay cost effective and stress free.
How much money do you personally have on hand to get this project done? Will you be doing the labour yourself? If so, is there room on your credit cards to cover the cost of supplies (don’t forget the pizza and pop costs if you are getting family and friends over to help)? Will you need to take out a loan with the bank? Does refinancing your mortgage make more fiscal sense? A professional and accredited financial advisor may be a good person to consult with first to help formulate a clear strategy for your renovation project. They can keep you on track and provide a reality check if that is what is needed to bring your construction fantasies back down to earth.
Sometimes when you have ideas on how to improve your home, you may not immediately realize how that can tie in with other areas around the house which can come in the form of a positive or negative after effect. That’s why having a renovation or remodelling checklist before any construction happens can help show you how everything may or may not be connected within your house and that if you are going to do repairs on one section of the home, it might also make sense to include an additional upgrade you didn’t realize was necessary. Coordinating your home improvement projects could mean the difference between getting one big renovation project done at once as opposed to having numerous little projects spread out over the course of time which in the end, means less time for you to actually enjoy your new space and the added comfort of the new upgrades.
Look into Tax Credits and Rebates
The push is on to be energy conscious and to do more to lessen the strain we put on natural resources and our environment as a whole. All levels of government have formulated all kinds of different tax incentives to encourage homeowners to make more environmentally friendly renovation decisions so be sure to check with your municipal, provincial and federal governments to see what kind of tax breaks are out there that you can take advantage of.
There are also many product rebates and incentives across Canada for Energy Star qualified appliances and things like low flush toilets. It’s a great idea to look into all these different products ahead of time because not only will it save you money on the overall cost of your renovation, you will also get to enjoy lower energy and water usage bills for years to come.
Plan for the Unknown
Always be sure to set aside a percentage of your renovation fund just in case something happens that is not covered by your deal with the contractor. Frequently, renovation budgets go over the estimates because you come across an issue only after work gets underway. You may also find yourself in the position of having to decide if you should get an old fashioned furnace repair or air conditioner repair as opposed to splashing out on new heating and cooling systems for your newly spruced up home. Having contingency funds will allow you to quickly and easily make these decisions on the fly without having to run back to the bank to apply for more funding.