Posted by: MonsterMortgage.ca
In today’s real estate market, there are a number of bidding wars that are driving up prices even on homes that you might not find to be up to your standards. Even in the House Hunters article, the Globe and Mail profiles a $1,000,000 property with some unimpressive electrical work…but with these bidding wars taking place across various real estate markets, what are buyers supposed to do?
One option….consider getting your dream home you want by renovating your existing home
According to the CMHC, over $22.8 billion dollars were spent on home renovations in 2010 across 10 major urban cities in Canada. A home renovation can mean different things to different people in different scenarios.
A young couple looking to purchase their first home with a budget of approximately $400,000. After finding a great home with an asking price of $400,000 the home becomes the subject of a bidding war and sells for an amount over the asking price.
The young couple may now be looking at a $450,000 purchase price in order to buy their dream home.
While this young couple may very well be able to qualify for a $450,000 mortgage, the young couple may want to consider other alternatives; such as purchasing a less expensive home and going the home renovation route.
In this scenario, the young couple could decide to purchase a $350,000 home and spend $50,000 on home renovations of their choosing. Through a home renovation, the young couple gets to hand pick just what home renovations will be done to the property. The young couple may find themselves in the perfect home with one major difference, they just saved themselves $50,000 by choosing to renovate vs. purchasing the first home they were looking at.
Also consider the family who already has their first or second home and might be looking to upgrade into a higher-end home in their current area….
Take a look at the list of their moving costs (prices will vary):
We have not even considered any money required to make standard upgrades to the home you just purchased.
After finally moving in, this family could be looking at costs upwards of $100,000. Why not consider an $80,000 home renovation where you get to hand-pick your own new wooden floors, kitchen counter-tops and washroom amenities?
Consider why you’re looking at a home renovation and take into account the nature of the home renovation in question. Different types of home renovations achieve different goals and increase the value of your home in different ways.
As per the CMHC, home renovations typically fall into three categories:
Lifestyle renovations improve your home and your way of life. These home renovations might involve building a sun room for pleasure, or converting unused attic space into living quarters to meet your changing needs.
Retrofit projects usually focus on your home’s shell or mechanical systems. Examples of these home renovations are upgrading your insulation, replacing your furnace, or putting on new siding.
Maintenance and repair renovations protect the investment you have made in your house through home renovations such as caulking windows, re-shingling your roof, or replacing your eaves troughs.
Consult with your mortgage broker on how you can best obtain home renovation financing and whether home renovation financing might be right for you.