How to plan financially sound renovations

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In the digital age, it's especially easy to get wrapped up in the possibilities that home renovation can afford – even if you weren't able to buy your dream home in your ideal neighborhood, the possibilities are (almost) endless when it comes to customizing your property. In fact, a recent BMO Financial Group survey about home renovation revealed that almost half of all Canadian homeowners are planning renovations this fall.

Not surprisingly – especially in this unique housing market – people are focusing on renovations that are sure to up the value of their homesteads, choosing to focus on bathrooms, kitchens and bedrooms. But instead of falling prey to what many Canadians automatically assume about renovations being costly, time-consuming ordeals, more than half of the hopeful renovators plan to spend less than $1,000.

But not all people are planning renovation projects that are just for looks; actually, 52 percent of respondents say their planned renovations are both for looks and function, and 34 percent say that the renovations are to make their property and spaces more attractive. But no matter the driving force behind these renovations, most people are planning to do the work in the next few months to get it off their plates before winter.

"Fall is a good time to focus on improvements and repairs for your home, as there are some things that may need to get fixed before winter rolls in," said Laura Parsons of BMO Bank of Montreal.

How to get finances to renovate
Although kitchen and bathroom redos are smart renovations – the potential return on investment is between 75 and 100 percent – it may not be easy to secure the funds for planned projects.

Thankfully, there are several options homeowners may consider before hiring a contractor and drawing up the blueprints. It's always wise to discuss potential options with financial experts and local mortgage pros, who will be able to help you determine if the investment is worthwhile and what the ROI may be.

The first option to fund a renovation include using savings or credit cards, though the latter should really only be an option if the balance can be paid off before interest charges start rolling in. Before depleting emergency funds and life savings accounts, consider the benefits of the renovation and determine how future expenses will be paid for, especially in the case of an emergency.

Personal loans and credit lines are another option, which typically offer lower interest rates than credit cards and may eliminate the need to reapply to borrow more money post-renovation.

Home equity loans may also afford homeowners the funds required to renovate at lower interest rates than they may have with credit lines and credit cards. In the case of large projects and complete property renovation, it's best to check credit availability before planning projects in case credit limits have been set based on your home's value.

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