If you’re finding your family has grown out of your current home or your house could use a makeover to better fit your changing needs, renovating is a great option to examine. Instead of putting your home on the selling block and heading out shopping for a new home right away, it may be worth considering using some of your home equity to renovate so you can remain at your current address.
The first consideration is whether your home can be adjusted to meet your needs. Is your lot big enough for an addition? Will your foundation handle the weight of an extra floor? Does the tired look of your home require a major overhaul? Will the renovations add value to the home?
Plan out the changes you’d like to make and speak to professional renovators to seek several quotes before making your decision.
Next, depending on the complexity of the project, you have to decide if it’s worthwhile for you and your family to live in a construction zone for several weeks or even months while improvements are being made to your home.
Finally, unless you have a lot of money saved up, you have to weigh your finances to determine what makes the most financial sense to you and your family in the long run.
Weighing your finances
Now is a great time to think about making renovations to your existing home to create your dream home. With mortgage rates still sitting at historic lows, it makes sense to use some of your home equity to put towards renovations that could help you remain in the house you love, in the neighbourhood you desire that’s close to work, school and amenities to which you’ve grown accustomed.
Other possibilities include a home equity line of credit (HELOC) – where you can access money as required for each stage of your renovation – or even a construction mortgage may be your best bet. The key is to talk to your Dominion Lending Centres mortgage professional who has access to multiple financial institutions and products to ensure you get the most bang for your buck.
It’s important to weigh the renovation costs with the potential for your home to increase in value as well.
Moving can also be quite expensive. Possible costs to consider when moving include:
- real estate fees (upon selling your existing home)
- legal fees
- property transfer tax
- moving expenses
- decorating the new home
- mortgage penalty
The decision between renovating and upgrading to a new house is not solely financial. You should also consider your time, energy and peace of mind.
Each choice has advantages and disadvantages. When determining the best option for you and your family, consider the pros and cons of both renovating your existing home and moving to a new home.
By taking into account what you want to do, why you want to do it, the costs of the renovations and upgrades, and the value of your renovated home in relation to other homes in your neighbourhood versus the costs of buying a new home, you can determine which option is best for you.
Thank you to my DLC colleague Alisa Aragon for this article.