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Your personal style can transform your house or condo into your true “home.” But which changes or renovations make the most sense when it comes to building value in your home? And will you need a loan to pay for them?
As shown in the figure to the right, some home renovations result in a higher average payback at the time of sale.
Before starting a home renovation project, it's a good idea to consider the following:
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Top 10 Home Renovations and Their Payback* |
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1. Bathroom (75-100%)
2. Kitchen (75-100%)
3. Interior Painting (50-100%)
4. Exterior Painting (50-100%)
5. Roof Shingle Replacement
(50-80%)
6. Furnace/Heating System
(50-80%)
7. Basement Renovation (50-75%)
8. Recreation Room Addition
(50-75%)
9. Installing a Fireplace (50-75%)
10. Flooring (50-75%).
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How long will you be in the home?
If you plan to stay for several years, your needs and desires for your living space usually become more important than adding resale value.
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Tip |
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A swimming pool may not increase the value of your home. People with children often avoid in-ground pools for safety reasons and many people feel they require too much maintenance.
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On the other hand, if your main aim is to boost your home’s resale value, you’ll probably want to perform the work that offers the best potential payback (you don’t want to put money into renovations that buyers won’t pay for).
Also check out the amenities in other houses in your neighbourhood. It’s good to bring your home up to par with others nearby—but you don’t want your renovations to make your home the most expensive on the street. Ask a real estate agent for help with the decision-making process.
How will you pay for the renovation?
Ideally, you would pay in cash, but before you liquidate assets, do the math: you may give up too much in potential revenue, not to mention possible penalties, if you cash out your investments. You may find that the costs of financing are lower.
RBC Royal Bank offers a variety of financing options to meet a wide range of home renovation needs:
- For smaller projects (typically under $5,000), consider using your RBC Royal Bank Visa Card.
- For medium term projects (over $5,000 and with a
1-2 year time horizon), consider an RBC Royal Bank personal loan or Royal Credit Line®.
- For extensive renovations, consider a secured line of credit. The secured line of credit offers a lower interest rate, but you must secure your home as collateral.
To learn more about a particular financing solution, click on its name in the left column below:
For additional guidance on the best type of financing for your home design or renovation needs, visit our Renovating a Home section.
*According to the Appraisal Institute of Canada, in its national 2004 Renovations and Home Value Survey.
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