With the recent expansion of our family, my husband and I are seriously considering a basement renovation to add to our living space and to accommodate live-in help when I return to work full time. It’s an expensive project and, neither of us being remotely handy, one that requires an experienced contractor.
We are planning to keep costs down by sticking to the basics and bypassing expensive materials and design choices. It helps to know that we can expect a high return on our investment when the day comes to sell our house. Renovations remain a popular way for Canadians to increase the value of their home, although the results of an RBC poll released on Wednesday show that many find it difficult to stay on budget.
Two-thirds of Canadian homeowners completed a renovation in the past two years and while 68 per cent of Canadian renovators established a budget, only half managed to stay within it. According to the poll, many also expressed some regret in the way their home improvements were completed. Twenty-eight per cent cited exceeding their budget as their biggest renovation mistake, followed by using the wrong contractor or trades people (15 per cent) and "doing it myself" (13 per cent).
“Canadians continue to consider any home improvement as a very good investment, but the challenge with renovating is that it’s easy to keep adding on projects,” said Patricia Everingham, director, RBC Personal Lending. “Costs can mount up easily and the next thing you know, you’re over budget and behind schedule. The best course of action is to plan a realistic budget and arrange for flexible financing options at the outset.”
On average, Canadians planning to renovate in the next two years expect to spend $10,796. Canadians have been using a combination of financing options, according to the bank’s survey, paying with cash or savings as well as credit lines and credit cards to cover the expense. On the surface, it may seem unwise to use high-interest credit cards, should you carry a balance, to pay for a renovation. However, the top reasons those polled cited for using a credit card were to earn reward points as well as to make it easier to track renovation expenses.
“Smaller makeover projects usually mean fewer expenses and a credit card offers a convenient way to pay as you go,” Ms. Everingham says. “If you are planning a major reno, borrowing a larger amount upfront often makes sense and helps you establish a budget you can stick with.”
Despite the ongoing popularity among Canadians for home makeovers, plans to renovate over the next two years have slipped compared with a year ago. Renovation intentions across the country have declined four percentage points to 62 per cent, likely due in part to the end of the home renovation tax credit.
For those intending to move ahead with a reno in the next two years, the two most popular planned renovations are bathrooms (38 per cent) and exterior renovations (32 per cent), including yard and deck improvements. Plans to renovate a basement increased the most at 21 per cent, up from 13 per cent in 2009.
For our basement reno, my husband and I are prepared to scale back our expectations to avoid spending beyond our means. We have already established a firm budget and just need to find the right contractor to work within it. With the high number of Canadians continuing to invest in home makeovers, though, finding a good and available contractor may become our biggest challenge.
