Don’t Wait to Renovate if You Want to Maximize Return on Investment
Is your family outgrowing your current home, but moving into a larger home is out of financial reach? Are you wondering if now is a good time to invest in those much-needed home improvements?
If you’ve been in your current home for a while and were lucky to lock in a lower-rate mortgage, this could be a great time to realize the benefits of home renovation.
When interest rates are high, and finances are tight, delaying home renovations might seem inevitable, but getting a good return on investment is still possible for many homeowners.
Read on to find out the five benefits of home renovations, which financing option works best when interest rates are high and why you should choose an experienced local contracting company for your renovation needs.
5 Benefits of Home Renovation When Interest Rates Are High
While it’s true that high-interest rates can increase the costs of borrowing the funds to carry out your desired home renovations, there are some benefits to remodeling when rates are high.
1. Renovating is a Better Financial Option than Buying New
You may think that buying and moving into a new home is easier and cheaper than renovating your current one. Yet, if you purchase a new home, you’ll need to renegotiate – and restart – your mortgage at today’s higher interest rates.
Higher mortgage rates and payments may put the option of a new home out of reach. However, if you renovate, you can retain your current lower mortgage rate and capitalize on the additional equity you have built up while house prices have risen around you.
Although several financing options exist for home renovations, high interest rates mean some options are not good choices at the moment, such as remortgaging to release equity or unsecured personal loans.
Nonetheless, suppose you have at least 20% equity in your house. In that case, you may be eligible for a Home Equity Loan or Home Equity Line of Credit, which uses your equity for security but does not impact your current mortgage rate.
- A Home Equity Line of Credit (HELOC) is a particularly good choice when interest rates are high. You can dip into the pre-approved fund as needed and pay it off as you go along, minimizing the interest you will pay.
2. Add Future Value to Your Home
Some renovations are proven to add value to your home once complete. If you choose to carry out the improvements that offer the best Return on Investment (ROI) potential, you will reap the benefits when the time does come to sell. When interest rates fall and housing sales increase again, you will be sitting on a property with higher value and equity to take into your next home. In the meantime, you can enjoy living with the upgrades.
According to HGTV Canada – some of the best home renovations to choose for ROI include:
- A home addition – whether it’s an extension, a home lift or a basement renovation, anything that adds extra space will add value.
- Bathroom remodel
- Kitchen renovation
- Energy-efficient upgrades – upgrading windows, doors and HVAC systems also bring lower energy costs and potential access to grants to offset the costs.
3. Your Renovation Can Pay for Itself
What if your home improvements could pay for themselves in a short amount of time? Adding a mortgage helper space such as a separate suite, renovated basement, an extra bedroom, or even a garden suite can bring in passive income that will allow you to pay off the cost of the work quickly.
Rental housing is, and will continue to be, in huge demand in Victoria, BC, so you are likely to be able to find someone to rent the space. In the future, you can reclaim this space for your family or benefit from the increased value when you sell.
4. Avoid the Stressful Housing Market
What if your current home no longer suits your needs – but the idea of entering the house sale market is daunting? Renovating means you can stay where you are – avoid housing market woes – and still have an improved lifestyle in your home.
According to Blog TO, high-interest rates result in too few new homes being built for the demand across Canada. This means that the housing market will likely remain tight for the foreseeable future. Avoid the bidding wars and pressure by staying put and renovating instead.
5. Take Advantage of Shorter Wait Times for Contractors
According to MPA Mag, 39% of Canadians have chosen to postpone renovations while interest rates are high, but their hesitation could be to your benefit.
Reducing demand for contractors and construction companies means you are more likely to secure a suitable timeline and budget. Take advantage of the lull and get on the books with a reputable, award-winning contracting company like LIDA Construction.
Choose LIDA for Your Home Renovations
Rising home prices and mortgage rates make it hard to find the perfect home, so why not stay where you are and renovate instead? LIDA Construction can help you get the home you want, with the features you need, without moving anywhere or re-negotiating your mortgage.
Our team has been renovating and remodelling homes in Victoria, BC, since 2006, making us your local expert in converting your house into your dream home.
Whether you are looking for an extensive remodel or have a specific upgrade in mind, we can help. We offer:
We offer transparent home construction pricing and regular budget updates, allowing you to plan your finances accurately.
We would be delighted to help you realize the true value of your current home as a beautiful yet functional space. Contact our team today for more information about our renovation services and how soon we can start making your dreams come true.