Variable | 2.75% | 2.15% | 0.60% |
1 Year | 3.65% | 2.49% | 1.16% |
2 Years | 3.95% | 2.95% | 1.00% |
3 Years | 4.70% | 3.45% | 1.25% |
4 Years | 5.34% | 4.09% | 1.25% |
5 Years | 5.49% | 3.99% | 1.50% |
6 Years | 6.45% | 5.25% | 1.20% |
10 Years | 6.30% | 4.99% | 1.31% |
15 Years | 7.55% | 6.90% | 0.65% |
25 Years | 8.25% | 7.00% | 1.25% |
**Rates subject to change without notice Last Updated: Tuesday, July 27, 2010
Home Equity for Renovations
Renovation Nation:
Canadians use their home equity to feather their nests More than a decade ago, trendspotters began to tell us about the future trend of “cocooning”. They predicted that decorating magazines, home renovation businesses and luxury home fashions and furnishings would see a big boom. But in 1991, we continued to look outside the home for our entertainment, and the idea of nesting at home seemed unlikely.
But the futurists were right, and Canadians have come home en masse: to work, to play, to socialize and to retreat. Not surprisingly, they are re-shaping their homes to accommodate their new passion for home life. Canada has become the renovation nation. Sales in home improvement reached $38 billion in 2005 – up from $20 billion in 2001. If you’ve tried to find a parking space at Home Depot on a Saturday morning, this information won’t come as a surprise.
Before you embark on a renovation project, you should consider whether you are improving your home for your own comfort, or to increase the value of your home. Renovations are not created equal, and some will perform better than others when it comes to adding value to your home.
Almost any renovation will add to, or at least protect, the equity in your home, but kitchen and bathroom renovations and painting normally provide the greatest payback when you sell. And over time, the money you save on heat, light and water by making your home more energy efficient may actually pay for the upgrades.
Most renovations will improve the value of your home, but you shouldn’t expect to fully recover your renovation cost. There are some exceptions, of course, and they often vary from one region to another. But the Appraisal Institute does provide a general cost/value guideline. For example, you can expect to recoup 68% to 73% of your investment in a kitchen renovation – making it the smartest renovation investment. A bathroom reno is second, at 64% to 71%. A fresh coat of paint on your home’s exterior is likely to recover 62% of the cost to do the work, and a mainfloor family room recoups 49% to 56% of the cost. But there’s more to the renovation fever than a desire to practice Trading Spaces at home. The passion for home life is coinciding with the availability of attractive financing. Mortgage rates are at historic lows, and Canadians are leveraging the equity in their homes to finance the upgrades they’ve been dreaming of.
If you’re planning to spend a significant amount on a renovation, then you owe yourself a conversation with your mortgage broker to look at your financing options. There are several options available depending on your situation. A secured line of credit could provide you with the funds you need. Or you may want to refinance your mortgage or consider a second mortgage.
Garden gazebo, rejuvenated kitchen or whatever your dream is, why not make it a reality?
Travis Kulasekere is a Calgary Mortgage Broker with Mortgage Architects.
Travis Kulasekere B. Comm |
