Renovations can be costly, with bathrooms ranging from $35,000 to $55,000, kitchens from $60,000 to $100,000, main floors from $100,000 to $150,000, and additions often exceeding $200,000. When it’s time to upgrade your home, how do you finance one of the largest investments in your property? Here are some viable financing options to consider.
1. Refinancing Your Mortgage
If you’ve been paying off your mortgage for a few years, refinancing might be a suitable way to fund your renovation. By adding the renovation costs back into your mortgage, you can keep your monthly payments manageable and predictable. This approach allows you to spread the cost over a longer period, making the financial impact less immediate.
2. Looking Into Grants
There are grants available that can help offset renovation expenses, particularly if you’re adding a basement suite or a living space for aging parents. Additionally, specific grants exist for upgrading HVAC systems or windows to improve energy efficiency. Every dollar saved through grants can make a meaningful difference in your overall budget as well.
3. Utilizing a TFSA (Tax-Free Savings Account)
If you’ve been diligently saving over the years, withdrawing from your TFSA to fund a major renovation can be a wise decision. Using your savings to invest in your family’s living space enhances your home’s comfort, value, making it a beneficial long-term choice.
4. Using an Inheritance or Unexpected Funds
Sometimes, a large sum of money comes unexpectedly, whether from an inheritance, a substantial tax return, an insurance settlement or a great investment pay out. Allocating these funds toward home renovations ensures you see a tangible, lasting benefit from the money, improving your quality of life for years to come.
5. Lines of Credit
A home equity line of credit can be an excellent way to finance a renovation. This flexible option allows you to draw funds as needed and pay them off at your convenience. It provides the freedom to manage your renovation budget dynamically without the pressure of lump-sum financing.
6. Selling and Combining Assets
In some cases, selling an underutilized asset—such as a ski boat, RV or a vacation property—can help fund a renovation. Another common scenario is when two families decide to sell an asset and merge their living spaces into a multi-generational home, benefiting both households in the long run.
Final Thoughts
Having a clear plan for funding your renovation is essential before starting any project. No matter which financing option you choose, remember that investing in your home is an investment in your future. A well-planned renovation not only enhances your living space but also increases your property’s value, offering long-term benefits. While we’re not financial advisors, we’d love to hear about your renovation goals and help you explore ways to bring them to life within your financial plans.
