Make sure you have enough money.
Before signing any contract, you must determine how to finance your renovations.
Your Tax-Free Savings Account (TFSA) is an excellent source of funds. You don’t pay tax on the money you withdraw, and you can redeposit the same amount the following year, so you won’t put off long-term goals (like saving for retirement). The Halliwells paid for most of their renovations with money they had saved in their TFSAs for three years.
You may qualify for a home equity line of credit. You can hold a line of credit almost indefinitely, paying only the monthly interest, but it’s better to think of it as a loan. Calculate how much you’ll need to pay each month to repay principal and interest over a year or two and stick to that repayment schedule. Because lines of credit are vulnerable to rising interest rates, you’ll want to liquidate yours as quickly as possible.
If your renovations include environmentally sustainable elements, such as high-efficiency windows or even a charging station for your electric car, you could obtain financial assistance from the State. Thus, the Halliwells were reimbursed for half the cost of the insulation. If you’re 65 or older, the government also has funds available to help cover the costs of making your home accessible by installing features such as a ramp or roll-in shower. (See Home Accessibility Tax Credit; CMHC; Rénovert Tax Credit.)
During renovations, you may feel like you always have your credit card in your hand. Don’t charge your card more than you can repay each month, and track all your spending against your budget. An unpaid card balance is a surefire way to blow your renovation budget.
Build-in extra time—David recommends adding a week for every month of work schedule—and add up to 25% to your budget for unforeseen costs. And don’t think of this cushion as a fund you can dip into at will — reserve that money for truly unexpected and unavoidable expenses.
If home prices continue to rise, you may recoup some or all of the cost of your project when you sell, depending on the nature of the renovations. (According to experts, upgrading a kitchen or bathroom tends to be a good investment.) But don’t count on it: house prices may stagnate or even fall, or your home risk of deciding on the neighbourhood to the point where the sale price will not be up to your expenses. It’s better to renovate to get more out of your home than increase its value.
How to save on work
Once you have the cash in your pocket, here’s how to make the most of it:
Take advantage of free expert advice. The Halliwells consulted with a real estate agent who recommended popular and valuable items in their renovations.
Set priorities. Decide where you’re willing to save and where you need the best (or at least the best). For example, you might want the best windows you can afford, but you might be without custom drawer pulls. Brian Tell, of Mississauga, Ontario, general contractor and finish carpenter for nearly 30 years, gives the following advice: “Don’t make false savings. If you want something durable, don’t skimp on the expense. But don’t insist on buying high-end if a cheaper product does the job just as well. Distinguish between what you need and what you want.”
Resist Pinterest. Once the work has started, stick to your plan as much as possible since modifications can be expensive. Pinterest is great for coming up with ideas, but once you’ve made up your mind, don’t go there, or you’ll spend months being overwhelmed with images that make you doubt your decisions and make costly changes to your planes. Brian Tell observes that some of his clients go over budget because they change their minds mid-term, forcing him to demolish developments that have already been started to rebuild them differently.
Give back and save. Consider buying new or slightly used building materials (e.g., interior doors). If you are redoing your kitchen, ReStore could even take care of dismantling and taking away your old kitchen free of charge.
Protect your
