Friday, November 1st, 2019
Life in a two-bedroom house with my wife, child and two dogs was peaceful until we started toying with the idea of home renovations.
An overdose of home renovation shows got my wife and I interested in giving our sagging house a facelift, but we wanted to stay within our budget. We learned that by refinancing our mortgage, we could access up to 80 per cent of our house value minus the outstanding balance on our mortgage, and we decided to take that route to fund the renovation.
It's always best to contact your bank to find out which is the best option for you. If you're planning to use the money immediately, then you might want to consider refinancing your mortgage, like we did. But if you'll be using the money over a longer period of time, then a home equity line of credit could be a better option.
Once we had a funding plan, we decided which areas of the house needed renovation, and we looked for a contractor that met our budget and timeline.
Here are five things we learned from our home renovation project.
Our home renovation required a building permit from the city. As a result, some contractors weren't interested in working on the project, and others increased their prices. A permit means their work will be scrutinized at every stage by a municipal inspector. It might be worth working with one of the contractors who are pro-inspection, even if their price is higher than others. The city inspectors ensure that work is done according to the municipality's standards.
We had a clear, concise statement with a breakdown of the costs of each area that needed renovation. The contract included material prices and a timeline for each part of the job. The document also included the total renovation cost and outlined the course of action in case of any disagreement.
While meeting prospective contractors, we asked for details of previous projects they handled and for references. We also asked for liability insurance coverage that was verified by calling the insurance provider.
Generally, contractors choose to work in an area close to where they live, or close to the location of their office. They hire subcontractors who are also based in the same area.
The contractor we hired was aware of the distance from his place of operation to our house, and he quoted the price accordingly. But he didn't consider that the subcontractors he hired later would charge him more than they normally do, because they had to travel far for work.
Halfway through construction, the contractor stopped work and demanded more money, citing cash-flow issues because of subcontractors demanding more to finish the initial work. You'll probably want to hire a contractor who operates in or close to your area. And if the contractor and subcontractors are travelling far, make sure you're aware of any additional costs this causes.
For a project requiring a permit, an inspector will visit the construction site every time a major stage is completed. During inspection, they might suggest changes. It's a good idea to ensure your contractor is present during inspections, so they have a clear understanding of any work that needs to be redone.
Homeowners can opt to buy their own materials or let the contractor buy for them. Contractors often get discounts at home improvement stores and can save money.
You'll just want to make sure that the product the contractor buys matches the quality you need. Lower prices sometimes bring poorer quality. We realized this the hard way, after discovering the quality of some items like doors, closets and a vanity weren't up to our standards at lower prices.
This article is provided for information purposes only. It isn’t meant to be relied upon as financial, tax or investment advice, makes no guarantees about future financial conditions or performance, and shouldn’t be considered a recommendation to buy or sell investments or financial products....Information contained in this article, including information related to interest rates, market conditions, tax rules, and other investment factors is subject to change without notice, and Tangerine Bank isn’t responsible to update this information. All third party sources are believed to be accurate and reliable as of the date of publication, and Tangerine Bank doesn’t guarantee its accuracy or reliability. Readers should consult their own professional advisor for specific financial, investment and/or tax advice tailored to their needs to ensure that individual circumstances are considered properly and action is taken based on the latest available information.