Whether you’re an enthusiastic new homeowner or an empty nester that finally has some spare time to revamp the kitchen or bathroom, the idea of a home renovation can be both exciting and daunting at the same time. While making decisions on back splashes and colour swatches can be the fun part, financing your project is never as glamorous – no matter how big or small the job.
“Understanding which borrowing option is best for you can help relieve some of the stress that comes with a home reno,” said Craig Bannon, Regional Manager, Mortgage Specialists, RBC. “A good place to start is by speaking with a lending specialist who can give you a tailored solution and help save you money in the long run.”
When thinking about how to pay for a renovation ideally, paying in cash is the way to go, but if you don’t have the full amount of cash available or your budget is being stretched, there are other options. RBC offers a few practical tips to help make your home improvement project a reality:
- For smaller projects (typically under $5,000), consider using your credit card and you could end up with not only a new bathroom but also have the opportunity to earn reward points at the same time. Credit cards typically carry a higher interest rate so it’s a good idea to pay off your balance each month or carry it for a very short period only.
- For medium term projects (over $5,000 and with a
1-2 year time horizon), it might be best to take out a large sum upfront and consider a personal loan or line of credit. If you do use a line of credit always make sure you set a schedule to pay back the amounts you withdraw, not just the interest.
- For extensive renovations, you may need to access money over a long period of time. Consider a secured line of credit. The secured line of credit offers a lower interest rate, but you must secure your home as collateral which could involve additional fees.
For additional guidance on the best type of financing for your home renovation needs, visit RBC’s Renovating a Home website.