Home reno financing made easy: From ‘new house’ to ‘forever home’

TV home reno shows are binge-worthy viewing for any homeowner. With magnificent before and afters, these shows can spark your own renovation dreams, whether your home has been in the family for generations or if you’re just eyeing up a first property. If you’ve got your eye on new designs, here’s how you can use smart home reno financing to get the job done.

Some people start with just one reno idea. (Of course, that can quickly scale up to a whole-house remodel with a fresh new layout.) For others, walking into their home may look like a blast from the past, and now it’s time to make their forever home match a new stage (and decade) in life. And when it comes time to move on, others may need to spruce up the place to attract the right buyer.

Doing home renovations at any stage of ownership can be a lot of fun, come with ‘exciting’ surprises, but most importantly — cost a lot of money! So let’s take a look at some areas you might want to tackle for your homeownership journey and how to finance those projects.

Pre-purchase home renovations: Home reno financing decisions start here

Before moving into your new home (or even before signing the offer letter), there might be a few things you’d like to change. It could be cosmetic such as the paint colour in the bedrooms or replacing kitchen appliances, or it might be more structural like adding a shower to a bathroom or fixing a sagging roofline. However, there may be a benefit to waiting before you renovate, since your ‘wants’ may change once you have a chance to live in the space.

If you’re buying an older home from someone else and there are obvious repairs needed, see if the seller will make these for you or knock off the cost from the purchase price. If it’s a pre-construction home, ask the builder for your desired upgrades before moving in.

Home reno hit list:

• Before purchasing, consider getting a home inspection to highlight red flag issues. Home inspections may uncover more serious problems such as bad wiring, plumbing or roofing.
• If you choose to ask the sellers to do repairs, remember you may be competing with other buyers, and straightforward offers have a better chance of winning. Focus your asks on major items that are pivotal to moving in, such as safety issues.
• For the same reasons, think about handling cosmetic updates yourself when you move in.
• If the home is brand new, you can create a “punch list” of items that the builder should repair before you move in.

Financial considerations: Quick tips for your home reno financing

• Before you seal the deal, make sure the additional repairs aren’t going to push you well beyond your budget. If so, reconsider your offer. It could make better financial sense to find a different property with less renovations needed.
• If you’re still negotiating the purchase, have your realtor discuss a price reduction based on the critical repairs needed.
• Plan for future renovations now, whether that will be in one month or five years. Talk to your ACU financial advisor in advance to make sure you won’t be in renovation limbo once you move in. Your ACU financial Advisor will recommend different financial solutions including the “Purchase+Improvements” option.

Read related: How to finance a home renovation

Years 1 – 5

After the first year, you’ll probably notice a few things you’d like to change that go beyond cosmetic updates. Instead of jumping into reno ideas and tile samples, take the time to make a wish list — and prioritize items that are necessities. This way, you’ll be able to plan out the work properly and give yourself time to decide whether it really needs to be done or not. In the meantime, just fix anything that breaks so you can continue to enjoy your home.

Home reno hit list:

• Décor: Change furnishings and accessories to make the space feel more like your own.
• Lighting: Whether it’s extra lamps or some interesting overhead fixtures, a change in lighting can dramatically change a space.
• Appliances: If you have a larger reno planned in the future, make sure they’ll fit into those plans.
• Paint is a relatively quick and inexpensive way to refresh your space.
• Adding a home office, especially for those who work remotely. This space could be more important right off the bat.

Financial considerations:

• For smaller updates, draw from your savings where possible, including your TFSAs.
• If you use your credit card or small personal line of credit for quick purchases, ensure you make your minimum payment each month.
• At this stage, avoid debt (or minimize it) by planning ahead and saving for bigger renovations.
• You can start saving more towards a future renovation by using a Pre-Authorized Contribution (PAC) to a TFSA or high interest savings account.
• Your ACU financial advisor can help you create a simple, automated savings plan to help you get ready for those larger renovations in the next stage.

Learn: Which credit card is right for you?

Years 6 – 15

At this point, you’ve probably decided what you’d like to change or update in the house and have hopefully saved for the renovations. Maybe you’ve decided it’s time to redo the entire kitchen — cabinetry, countertops, flooring and all. Or maybe the bathroom is in dire need of updating from that early ‘90s tile to something fresh and modern.

In the rooms where you’re not doing extensive updates, consider making smaller changes to refresh them, too. A new throw rug in the family room or new lighting fixtures in the bedroom can go a long way to making your house feel like a home.

Home reno hit list:

• Kitchen and bathroom remodels
• Energy efficiency upgrades, including windows and doors
• Basement projects including complete finishings (walls, flooring, ceiling), adding a bathroom or creating a rec room
• Say goodbye to that popcorn ceiling
• Kids’ rooms: With growing families, there could be a couple of décor and layout changes over the years, plus potential room swaps as children turn into teenagers and beyond.
• Laundry room upgrades: The washer and dryer may have seen better days by this point, so it could be time to give them an updated surrounding, too.

Financial considerations:

• An ACU financial advisor can help you identify the difference between what you’re planning to spend and what you’re able to spend.
• Consider a low-cost borrowing option such as a personal line of credit, which are best for projects between $5,000 to $30,000. Your ACU financial advisor will help you develop a plan to pay it off quickly by automating your payments to keep you on track.
• An ACU low interest loan can also provide flexible terms and get your renovation projects off the ground.

More than 15 years

At this stage, you’re comfortable in your home but have been hit with the renovation bug. The differences between room you’ve updated and those stuck in the past are getting too noticeable. But your dream of converting the main floor to an open floor plan will need more than just a visit to a hardware store. It’s time to consult a designer and contractor to help make your dreams a reality.

Since this probably isn’t your first home update, you might also have a list of smaller repairs needed. For example, there could be the odd baseboard that has gotten nicked over the years and high-traffic areas could use some paint touch-ups. Take the time to make a quick list of these items and then start tackling them throughout the year.

If you’ve already updated the look and feel of your home, investigate the structure and functional items. Will that outdated plumbing explode, most likely right in the middle of a cold, cold winter? Are there water leaks in the ceiling, or cracks forming in the basement? Start proactively looking at some of these items, including roofing, electrical and heating. You may also be able to take advantage of the provincial and federal tax credits for environmentally-friendly heating options.

Home reno hit list:

• Adding a pool, BBQ area or new outdoor living space
• Adding a porch, sunroom or patio to make the most of all seasons
• Completing attic or loft space to provide more space for growing families
• Replacing and insulating siding and trim
• Foundation issues and drainage repairs
• Roofing repair
• Wiring and electrical
• Furnace upgrades for better efficiency
• Multi-generation home remodels including in-law suites and home additions
• Accessibility adaptations to help get around the house and make it safe
• Driveway upgrades, particularly if cracks and damage has begun to form
• If your home has a historic designation, you may also need to address repairs to preserve its heritage.

Financial considerations:

• For larger projects such as expansions, landscaping or redoing your basement, consider a loan, mortgage add-on or mortgage refinancing.
• In this case, your renovation budget is likely over $30,000.
• You’ve likely built equity in your home over the years and could potentially access credit up to 80% of the value of your home with an ACU Home Advantage Plan Mortgage. This financing can provide a higher credit limit and a lower interest rate compared to other loans and lines of credit, so they are more suited to long-term funding.
• Bonus: In addition to your renovation, you can use some funds for any other purpose, such as your children’s education or a vacation home.

Before selling: Home reno financing to maximize value

After a life well-lived in your home (and all the renovations you’ve done up to now), you may decide it’s time to move on. To maximize the amount of money you can make from the sale, take an objective look at updates that will make a real difference in the buyer’s eyes.

Renovation pros like HGTV’s Bryan Baeumler say that the number of renovations you should do before selling depends on each homeowner’s situation. It may not be worth doing anything to a house that hasn’t been renovated in decades, but if you’re in a seller’s market, you could increase your sale price with targeted renovations. At the very least, consider refreshing the paint in high-value rooms like the kitchen and bathroom, replacing the hardware on cabinetry in the kitchen, swapping outdated light fixtures and decluttering bedrooms.

Renovation checklist:

• Add curb appeal with fresh paint to the front door, plants, shrubs and lower-ticket landscaping.
• Cosmetic paint updates to fix obvious peeling, dents or holes in walls.
• Update kitchen and bathroom countertops that can make a visual splash.
• If they’re still in good shape, paint your kitchen cabinets rather than replacing them.
• Focus more on decluttering the space and making it super clean and tidy. Some buyers prefer to renovate themselves, so make it easy for them to see the space beyond your personal furnishings and décor.
• Larger renovations can also pay off, but look at your home reno financing considerations first…

Financial considerations:

• At this stage, weigh the potential additional profit you could make against the expense of any renovations. If you will be cash positive, consider the updates. But if you will be in the hole, leave those repairs for the next owner.
• Consult with the professionals, starting with your real estate broker and your ACU financial advisor. They can provide advice on the dollars and cents of reno budgets, available cash flow and whether your money is being used wisely at this stage.

Renovating your house can increase your enjoyment when living there, as well as make a difference if you sell your house.

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No matter why you decide to tackle the renovations, your ACU advisor can point you in the direction of options to help fund the work. Set up a time to discuss when you’re ready to learn more.

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