The typical cost of home additions can wary widely, depending on what areas of the home you are renovating and the scale of the renovation. With the typical cost of kitchen renovations reaching into tens of thousands of dollars for a full remodel, you might be wondering what the best way to finance your renovation is. In our two-part series of blog posts on financing your renovation, we’ll give you some things to consider and some popular methods of financing the renovation.
The reality is that there are numerous ways to finance your reno and each comes with a list of pros and cons that differ from person to person. Before you read our list of some popular ways to finance your renovation in our next blog post, there are a couple things you should keep in mind before approaching your financing options:
- Determine how much money you will need. You’ll need to speak to your contractor to get an accurate estimate which is broken down into materials and labour.
- Add an additional 10% to your budget to account for surprises. If something unexpected occurs, you don’t want to be scrambling for money last-minute.
- If you’re doing any work yourself, make a detailed list that includes the cost of materials, permits and any equipment you might need. Then give budget an extra 20-30% to act as a cushion.
Since lenders want to know the specific amount of money you’re asking for, it’s important to give careful consideration to our above recommendations before visiting the bank. At this point, you’ll want to explore which type of financing option is best for your renovation. How much money you will be able to obtain from a loan will depend on a few things, such as:
- Income
- Credit Rating
- Loan-to-Value Ratio
The best loan rates are going to be available to people with a good credit rating. This impacts the interest rate, the length of the loan and smaller factors.
Stay tuned for the second part of our series on How to Finance Your Renovation. We’ll outline some of the top ways people finance their renos to give you a good starting point for financing your own renovation.
