Tag Archives: home renovations

Home Renovations Loan: Things You Must Know

Home renovations can be an excellent investment as they can help improve your quality of life. It also increases your home’s resale value and net worth in the long run. However, home renovations can get expensive, where the price can reach up to tens of thousands of dollars or more.

The home renovations budget needs to be considered, and there are times that the expenses for home renovation and improvement do not fit the budget. Home renovation loans can help you borrow the cash you need for a price, while you can also determine how much is the home renovations tax credit is available.

There are types of home improvement loans, as borrowing money or getting government grants for home renovations can have several financing methods that you can take out as a loan.

  • Personal Loan

Personal loans can be considered the most common type of home improvement loans that can be used to pay for many things. They range from traditional and online lenders, so it’s easy to check if the terms are favourable to you. A personal loan is one type of unsecured debt wherein it is not tied to any collateral.

  • Home Equity Loan

A home equity loan is a type of secured loan wherein you have your house as collateral for the loan. It means that a lender can legally take your home away from you if you default on your loan. A Home Equity Loan can give you money all at once for a fixed interest rate loan.

  • Home Equity Line of Credit (HELOC)

Home Equity Line of Credit (HELOC) is a mix of a Home Equity Loan, and a credit line wherein borrowers have access to a limited amount of funds on an as-needed basis. It means that you are not paying to borrow money that is not yet needed, which is suitable for a long-term home improvement project.

Besides the types of home renovation loans, there is also a list of things you must know about applying for a home renovation loan:

  • Deciding the loan amount

A homeowner needs to calculate the loan amount they need for their home improvement project. It is also essential to make a list of the things required for home renovations to determine the total budget. After this, the next step is determining how much of your savings can fund the renovation. It is also needed to determine how much is required to take as a loan.

  • Eligibility Criteria

Once the loan amount is decided, the eligibility criteria are the primary factor to consider when applying for a home renovation loan. Lenders have various parameters for the eligibility criteria, aside from the essential criteria that include age, income, and residence. Homeowners should inquire with lending organizations to understand the eligibility requirements and determine whether they can fit the requirements. Additionally, an online personal loan eligibility calculator can also help a homeowner understand the loan amount where they are possibly eligible.

  • Choosing the best home renovation loan for you

For mid-range sized home improvement projects that could cost $15,000 to $50,000, a homeowner can consider unsecured or home improvement loans that are easy to apply for with no collateral requirements. However, interest rates can cost more than Home Equity Loans or Home Equity Line of Credit (HELOC).

  • Exploring different loan rates

Before settling on a particular loan rate, it is helpful for homeowners to do some research to compare the interest rates of available lenders. Regardless of the type of loan a homeowner chooses, it is also essential to know that the final interest rate can depend on many factors, including credit history and repayment capacity.

  • Repayment tenure and EMI of the loan

It is also crucial to note the repayment tenure and carefully plan out how to pay the home renovation loan. It is recommended to use an online personal EMI calculator to understand monthly instalments, interest rates, and tenure.


How Much Do Home Renovations Really Cost?

Home renovation is not a cheap venture. The cost is one primary concern of homeowners, whether they decide to do it themselves or enlist the help of home renovation contractors. Surprise costs, delays, and other things that may pop up during home remodeling may shock new homeowners who are not yet fully aware of how much these improvements might cost them.

There’s also the harsh possibility that remodeling plans and expectations won’t be the same in reality. According to the 2019 CIBC Home Renovations Poll, 49% of Canadians have home renovation plans in 2019 with an average budget of over $10,211. Additionally, 39% of them went over budget. Now comes the question of how much the budget should be for home renovations?

Factors that Influence Home Renovation Costs

Several factors affect home renovations’ cost, making it higher or lower than the expected amount of a homeowner’s budget.

  • Size of the house

Renovating a larger home space entails a homeowner spending more money on the home improvement project.

  • Age and condition of a house

Home renovations for an old house may reveal more expensive costs, such as replacing old knob-and-tube wiring, old lead pipes and removing the buildup of asbestos in the house over time.

  • Home renovation contractor

The choice of renovation contractor can greatly affect the total cost of their home improvement project. While hiring an established and trusted renovation contractor requires more money, a home renovation loan can help in shouldering the costs so the job can be done more easily.

  • Parts and materials

While the quality of materials used for the home renovation can affect the overall costs, budgeting should not come at the expense of compromising the home renovation project itself.

The Estimated Cost of Home Renovations

  • Kitchen Renovation Cost: $25,000 to $50,000

Findings from Trulia’s “Remodeling on the Rise” survey stated that kitchen remodeling is the most popular among homeowners. Depending on the renovation scale, kitchen remodeling can cost you around $25,000 to $50,000. Kitchen renovations do not come cheap, as the Appraisal Institute of Canada recommended that a homeowner allocate 10% to 15% of the expenses for the renovation’s overall value.

  • Bathroom Renovation Cost: $9,000 to $15,000

Renovating a home’s bathroom is always a good investment that can impact the value of your home in the long run. Trulia’s survey also stated that a bathroom renovation is the second most popular home remodeling project among homeowners.

The cost of bathroom renovations, with an estimated cost of around $9,000 to $15,000, mostly depends on several factors such as the updates to the bathtub, shower system, toilet, vanity, sinks, faucets, tiles, flooring, and light fixtures. A bathroom update can also involve plumbing, electrical work, or even knocking down walls for a change in the bathroom layout.

  • Bedroom Renovation Cost: $5,000 to $10,000

The price for a bedroom renovation depends mostly on the scale and the overall look you aim to have for your home. With improvements such as replacing carpet for hardwood, painting the walls, or simply updating the look of your bedroom space, this could cost you an estimate of over $5,000 to $10,000.

  • Basement Renovation Cost: Over $10,000

Renovating your home basement can be a big job, and they can get really expensive, amounting to an estimated cost of around $10,000 or higher. Giving your basement a makeover can involve installing drywall, insulation, flooring, lighting, and even making storage and moisture-proofing your basement space.

Even though a basement renovation can be expensive, it also helps increase the overall value of your home in the long run.

  • Painting Cost: $2,000

            A fresh coat of paint for the walls of your home can do wonders, as it offers an easy and generally inexpensive way of brightening up your home space. The overall cost of painting your home is dependent on the size of the space, brand and quality of the paint, and labor expenses.

  • Flooring Cost: $3,000

            Several factors like the type of flooring, home size, and installation quality can lower or raise the flooring cost in your home renovation project. Removing old flooring and addressing issues of this removal can also add to the renovation expenses.