A home renovation is one of the most efficient ways to increase the overall value of your home. If you have been thinking about selling your home a renovation will also attract a wide range of buyers and generate interest in Penticton’s summer real estate market. As the premier real estate agent for Penticton, here are some tips on how to set and keep your renovation on budget.
Start with an Estimate
One of the easiest ways to arrive at an estimated cost for your renovation is to think of each of your home’s rooms as a percentage of the overall value of your home. For example:
A kitchen generally accounts for 10 to 15 percent of the overall value of your property. If your home is valued at $ 100 000 then the total cost of a kitchen renovation should be no more than $ 15 000.
Here’s the Deal:
A kitchen renovation offers one of the lowest rates of return on your overall investment. For every dollar that you spend on your kitchen increases the value of your home by 50 cents. The highest return on a renovation investment is a mid-range bathroom remodel.
Get a Loan
Once you have arrived at a dollar amount for your renovation, the next step is securing a loan to pay for it. There are many different loan options which include:
- Refinancing – Depending upon your current mortgage, you may want to think about refinancing at either a lower rate or for a longer term. This will reduce your monthly payments and you can apply this savings towards your renovation costs.
- Home Equity Loan – Otherwise known as a second mortgage, this type of loan will allow you to borrow a percentage of the overall value of your home to cover your home renovation.
- Line of Credit – Talk to your bank or lender about interest rates. If you can secure the dollar amount at a rate that is better than either of the two other options, then a line of credit is an excellent way to pay for your renovation.
Regardless of what type of loan you use to pay for your home renovation, it is a good idea to borrow an extra 10 to 15 percent more than your original estimate. This will cover any cost overrun or unforeseen expenses or issues that may arise.
Once you have secured the money for your renovation project, it is time to find the right contractor for the job. Take the time to talk to a wide range of contractors and make sure to get a quote from each. Ensure that your quote covers all the materials that are going to be used as well as a time frame and the final price. It is also a good idea to ask for past job references and inquire about what type of insurance they have.
Stick to the Plan
The fastest way to incur cost overruns on your renovation is by either adding on side jobs or changing your mind mid-way through a renovation. If at all possible, stick to the original renovation plan to keep on budget.
A home renovation is a great way to breathe new life into your home or to stir up interest and intrigue in the real estate market. If you would like more information on how to set a budget for your home renovation or are interested in listing your home on Penticton’s real estate market, please contact me today.