Home renovations can increase your enjoyment and the property’s value. It’s important to pick and choose the ones that fit in with your budget and have a good return. According to a recent industry report from HomeStars, Canadians have a good appetite for this type of project. In fact, the 5th annual 2023 Reno Report states that 73% of the homeowners who are surveyed plan to do at least one renovation in the next year.
That doesn’t always mean they choose the most expensive. While 77% of respondents in Ontario reported having the money on hand to get started on a project, 23% said they would need to finance some of it.
For both those groups, simple home renovations provide maximum property value. Here’s a list of the 5 best ones in that category, plus everything else you need to know.
Are you looking to increase the value of your property without breaking the bank?
Home renovations can be cost effective and inexpensive at the same time. Here are a few suggestions to get the ideas flowing.
- One of the easiest and cheapest methods to increase your home’s value is repainting. Choosing the right paint for a bathroom means looking for a colour that blends in with the room next door.
- Upgrading light fixtures in any room can make any space look more inviting and bigger. Looking at current trends can make a big difference.
There are many other options like these. If you have a damaged credit score or are looking for a quick approval process, a private lender can be a good option for financing. The approval process for these loans is faster than other institutions. That’s an advantage if your renovation needs to be done quickly. Still you’ll need a good idea of the best renovations to incorporate using one of these lenders.
Top 5 Renovations to Boost Property Value with Private Lending
Private lenders are an alternative way to get the money for renovations that boost your property value. It’s important to know approval depends on your existing equity and the condition of the property and not necessarily your credit score.
Here’s a list of the top five renovations to consider to get the biggest boost to your property value.
The Kitchen
Remodeling a kitchen is always a top investment. There are several things that you can do to give an outdated space an upgrade. New cabinet hardware on drawers and doors is a cheap way to give the room a refresh.
If you’re looking to make a bigger change in your kitchen space, new floors are an excellent option to consider. Hardwood floors are soft on the foot and timeless.
Keep in mind that the Appraisal Institute of Canada (AIC) reports a kitchen renovation can boost the home value with an ROI of between 75 and 100%. HomeStars pegs the average cost here at $30,944.
The Bathroom
The budget you’ll need to redo a bathroom varies, but some averages peg the cost at somewhere between $5,000 and $15,000. As far as financing goes, It’s important to remember private lenders have a streamlined approval process that includes a Loan to Value Ratio (LTV). The LTV is assessed at no more than 75% of the appraised value of a property.
The Siding
A private lender can require an appraisal of your property before they accept your application for a loan. Appraisers often look at structural elements as part of the process. Replacing your siding will go a long way to increasing your value. You can choose from different materials, including vinyl and aluminum, as well as engineered wood. Here’s the list of the average cost for each type per square foot.
Energy Efficient Upgrades
Here are a few tips on the kind of renovations that can help you cut down on your energy costs and boost your home’s value at the same time.
- Window installation kits lower heating and cooling costs while boosting value. If you’re replacing windows entirely in your home, look for double glazed units.
- Spray foam is an excellent type of insulation that acts like an air sealant. It’s an outstanding addition to your attic and pipe inlets.
- Outfitting your home with Energy Star certified appliances helps for lowering costs and reselling. For example, an old refrigerator is 40% less efficient when it’s ten years old.
Adding a Deck
Adding a deck to your home with private lending has a good ROI. According to the website Remodeling Calculator, the average cost to build one of these is between $3,150 and $5,120 dollars. The return on the investment is around 70%.
It’s important to remember that private lenders don’t put a heavy emphasis on your credit score. That means your chances of approval are much higher if you’ve had some financial issues. Regardless of where they get the money from, homeowners will want to know if renovations are worth their time.
How Much Value Can Home Renovations Add?
The bottom line for any home renovation is how much value it can add. According to Investopedia, the value that you get depends on the renovation you take on.
For example:
- For a bathroom remodel, you can expect to get 70% to 78% of your cost back.
- A major kitchen remodel is the same– you’ll get a 70% to 78% return.
- A basement remodelling job will return 65% to 75% of your cost.
- Window replacements are also high on the list at 75% to 80%.
If you’re thinking about adding on a wooden deck, you’ll get 80% to 85% average cost recovery on the project. One of the best things about home renovations is the financing and the different options available.
Budgeting for Renovations: Are Flexible Options Available?
Renovation Guru Mike Holmes suggests adding 20% to your budget for unexpected delays, but that’s when you’re looking for a final number. You need to go through a process and a payment schedule that often includes 10% upon signing.
There are several things you should look at when you go to get a loan. Some homeowners look at a home equity loan or secured line of credit. Both of these are tied to your home’s equity, and there are set-up costs that can include legal fees.
It’s important to remember that private lenders have flexible criteria for approval. They don’t place as much emphasis on the credit score, and their approval process is more streamlined. One of the reasons is they focus on The Loan To Value Ratio (LTV), a formula whereby private lenders divide the amount of the application by the appraised value of the property. They require an LTV of no more than 75% of the appraised value.
Looking to Finance Simple Home Renovations With a Private Lender?
Mortgage Broker Store specializes in several different mortgage-related products. Mortgage requirements that don’t meet traditional lending institution requirements are one of our focuses. We have private lenders, brokers, and licensed mortgage agents on the team. We can help you prepare for and get a private loan that will suit your needs.
Email ron@mortgagebrokerstore.com or call 416-499-2122.
