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Maximising Your Home's Value: Key Renovations to Consider

Pine is a trusted Canadian mortgage lender dedicated to empowering individuals with the knowledge and tools necessary to confidently save money in their home buying and home owning journeys. As experts in the mortgage industry, our collaboration with Intact offers you valuable insights and industry-leading advice on all aspects of homeownership.

Investing in home renovations, if affordable, promises dual benefits. It not only enhances the value of your property immediately, but also elevates your living experience until the time you decide to relocate.

However, the reality is that many Canadians may find it challenging to access the necessary funds for extensive renovations, which are often around the $25,000 mark. This is where smart investment choices come into play. If you are keen on boosting your home's worth without depleting your savings, it's crucial to prioritise those aspects of your home that will provide the most value for your investment.

Moreover, it's important to remember that certain renovations might have implications on your homeowner's insurance. Depending on the changes, your coverage may need to be adjusted. This underlines the importance of not only considering the potential mortgage benefits of renovations but also their possible insurance implications.

Types of renovations

Functional upgrades: Start by focusing on renovations that enhance your home's functionality. Does your heating system need repair? Fix it to ensure your home is fully operational. Is your basement still a work-in-progress? Allocate resources to finalise it before diverting funds to cosmetic updates. These essential upgrades not only bolster the value of your property but can also help preserve its market value by eliminating the need for extensive future repairs.

Structural remodelling: Altering your home's layout can significantly impact its appeal and value. Open-concept designs remain popular and can make your home feel more spacious and inviting. You may want to consider removing walls that separate your living areas from other spaces, such as the kitchen, dining room, or entrance. Adding more living areas is generally beneficial but do ensure these modifications won't compromise your home's structural integrity. Other potential structural modifications can include introducing a bathroom to your basement or installing a kitchen island.

Buyer Preferences: Certain renovations reliably boost property values. These include modernising kitchens and bathrooms, switching from carpet to hardwood, and adding a backyard deck. However, consider the long-term costs versus value of popular additions like pools. To prioritise renovations, review what your home lacks compared to others in the neighbourhood. This strategic comparison will guide your renovation decisions.

While considering these renovation plans, it's important to understand how they might affect your insurance coverage. For instance, certain additions like pools might require additional liability coverage. As a homeowner, making informed decisions about renovations includes both understanding the mortgage implications and the potential changes to your insurance requirements.

Best Renovations to Boost Home Value

Create More Living Space
Estimated Return on Investment: 100% or more
Creating additional spaces for work, relaxation, and entertainment can significantly increase your property value. The recent shift towards spending more time at home makes such renovations especially worthwhile. Consider creating a second living area or opening up existing spaces, provided your home's structure allows it.

Remember, extensive structural changes may necessitate modifications to your home insurance policy to ensure adequate coverage.

Out With Carpet, In With Flooring
Estimated Return on Investment: 100% or more
Modern design favours hardwood, laminate, or vinyl flooring over traditional carpets for their aesthetic appeal, ease of maintenance, and air quality benefits. While self-installation can save money, it requires investment in tools and patience.

Enhance Your Curb Appeal
Estimated Return on Investment: 90% or more
Upgrading your home's exterior enhances its perceived value. Consider replacing visible vinyl with stone or brick, or opt for a new garage door. If you’re on a tight budget, weather-resistant decals can also boost curb appeal. Any significant exterior changes may influence your insurance coverage, so it's worth checking with your provider.

Remodel Your Kitchen or Bathroom
Estimated Return on Investment: 75% or more
Modern kitchens serve as more than just food preparation areas; they're spaces for hosting and entertaining. A kitchen makeover involving stainless steel appliances, a classic backsplash, and new cabinets can be a worthwhile investment. Similarly, updated bathrooms also add significant value. While initial costs may be high, the returns are typically favourable.

Basement Completion
Estimated Return on Investment: 75% or more
A finished basement not only extends living space but also eliminates the detracting factor of an unfinished area. The return on investment for this renovation is usually high, particularly if the renovated space can serve as a rental unit. Just bear in mind that changes like these could alter your home's value and potentially your insurance premiums.

Looking to Renovate but Short on Cash? 

If you're eager to commence home renovations but lack the necessary funds, leveraging the equity in your home could be a viable solution. Depending on the equity you've built up, you could contemplate refinancing or establishing a Home Equity Line of Credit (HELOC).

A HELOC allows you to borrow against your home's equity, making it a preferred option among many Canadians for home renovation financing. Provided you have at least $100,000 in equity, a HELOC can provide considerable borrowing capacity. However, it's crucial to remember that such loans typically need to be repaid within 10 to 15 years.

Conversely, a cash-out refinance involves renegotiating your mortgage terms to secure the loan, essentially requiring you to gain approval for a new mortgage.

The choice between these options depends on your equity, financial situation, and the time frame you envisage for loan repayment. Refinancing generally allows for a longer repayment period—potentially up to 30 years—providing more time to repay the loan.

In both cases, any substantial renovation work financed this way may affect both your mortgage and insurance situation. Significant home improvements could raise the value of your home and thus require adjustments to your home insurance policy.

*Article written by Pine Canada Financial Corporation. For informational purposes only. This article is not a recommendation, advice or guarantee by Intact Insurance.

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