Renovations not only breathe new life into your home, they also increase the resale value of the home. If your desired renovations are going to tally thousands of dollars, consider a loan or line of credit to help cover these expenses.
Types of renovation loans that are available
The lending option you need depends on the renovations you'll be performing. Loans are generally better suited for one-time use. For example, installing a slate roof, adding a family room, or building a new garage is an isolated project. On the other hand, plans to re-do the kitchen and the bathrooms over the next year will be ongoing, so you may be more interested in a line of credit. Here's a snapshot of how each option works.
Loan: A personal loan provides you with the funds you need to make a large purchase while giving you a lower interest rate than a credit card and a set timeframe in which to pay off the loan. You can secure your renovation loan using the equity in your home as collateral, which may make you eligible for an even lower interest rate. Loans are also somewhat customizable in that you can select your preferred interest rate, whether it's fixed or variable, as well as your preferred repayment plan.
Line of credit: If your renovation plans are ongoing, look into either a personal line of credit or the CIBC Home Power Plan®. Both of these products allow you to borrow money and repay it as necessary.
You can think of a line of credit as being similar to a credit card. Once you have access to the funds, you don't have to reapply each time you want to use them, plus a line of credit will give you a lower interest rate. This makes it a more flexible solution because even if you don't know exactly how much you'll need for a certain project, you'll have peace of mind knowing it's available to you when the time comes.
With a line of credit, you also have the option of securing it and lowering your interest rate by using your home as collateral. Plus, you can take out money on your line of credit from your debit card, bank machine, online and more.
Maximize your loan with these renovations
With your financing in place, it's time to prioritize your desired home renovations. Your loan or line of credit is better spent on some renovations than others. Consider making these enhancements to your home to both improve its comfort and resale value:
- Update your bathrooms: Make your bathrooms contemporary with new fixtures, a low-flow toilet, space-saving cabinets, fresh paint and new tile. Remodeling bathrooms can have a 56% higher return on investment than average renovations.
- Expand the kitchen: If you have a small galley kitchen or a kitchen that's poorly laid out, invest in updated cabinetry and appliances. You could see an ROI from your work here that's 44% higher than average.
- Replace the floors: Hardwood floors are a major selling point in homes. If you have them, invest in refinishing them. If you've got tired carpet on top of nice floors, rip that out and spruce up the floors.
On the other hand, you may want to reconsider the following renovations. They generally don't fetch much more when selling your home.
- Landscaping: While improving your home's curb appeal can help you sell it, going overboard can work against you. If you create a garden that looks complicated and the potential buyer doesn't have a green thumb, it may be off-putting.
- Adding a swimming pool: This luxury item is a nice touch to your home, but only if you're committed to all of the work and maintenance.
- Adding skylights: If you want to add more light to a room with a skylight, bear in mind that buyers are unlikely to pay a premium for this feature.
Apply for a renovation loan or line of credit with CIBC
Get your home renovations underway with a personal loan, line of credit or Home Power Plan® from CIBC. You can also learn more about these products and your options by visiting a CIBC branch or reaching out to a CIBC advisor at 1-866-294-5964.