Millions love watching home reno shows – but how easy is it to do (and fund) such projects in real life? As seen in REW.ca
Home renovation shows are very popular today and are one of our favorite shows to watch. These shows are not only entertaining but tend to lead you to think how easy and quick it is to renovate your home. And we know that viewers enjoy the shows more when they are filmed in Vancouver as you recognize certain landmarks or streets, which you see often when you watch shows like Love it or List it Vancouver and Game of Homes. However, television shows are unrealistic, highly edited and can mislead people on the renovation process.
It’s true that we have become more knowledgeable about design and we definitely want the latest interior finishes and stylish open interiors that we see on television shows. But homeowners really need to understand all the less entertaining but very important factors involved in a home.
Most home renovations shows do not talk about the financing aspect of the renovation – that’s not considered “sexy” enough for TV. But it is one of the most important aspects of your project – how are you going to pay for it?
Before you commit to a renovation project, meet with a mortgage expert to help you assess your financial situation. Every person’s financial needs and options are unique.
When asked, most people say they are financing their renovation with a line of credit. While you are only required to make payments on the interest only, many people are under the impression that they can manage paying the interest and go ahead with the renovations. The danger with using this type of financing is that eventually the principal has to be paid and you end up paying huge interest costs.
A home equity line of credit (HELOC) will give you a lower interest rate… if you currently have one in place. If you don’t, you will need to have at least 35 per cent of equity in your home to qualify for one (based on the current mortgage rules by the Bank Act).
Currently, you can refinance up to 80 per cent of the value of your home for a mortgage based on the appraised value. With today’s historical low interest rates, you will end up paying a higher interest rate on a line of credit or HELOC, and you are unlikely to pay down the principal compared to a lower interest rate with a closed mortgage where you pay principal and interest, saving you thousands in interest.
Another thing to consider if you are unable to pay off the debt quickly is that you might be better off to refinance your mortgage. It might be more beneficial to get a one- to five-year locked mortgage below three per cent by saving interest up front and using your lender’s pre-payment privileges. If you currently have a fixed-rate mortgage, find out what would be your penalty for paying it out early, it might still be worth it to refinance.
On television, the designer often has some budget like $80,000 to renovate an entire main floor including the kitchen and finish the downstairs basement. The question is – are those numbers realistic? The reality is that we, as viewers, are not aware what has been factored into those numbers by the television producers such as design fees, permits, labour, material costs, and promotional giveaways, etc.
In order to have a realistic budget for your renovation, do research before you commit. Some people get a specific number set in their mind without knowing what is involved in the total scope of the renovation. It is critical in this step to work with a professional renovator as it will reduce surprises. Homeowners need to take responsibility for the renovator they select and for doing their homework.
A great source for proven renovators builders is an association such as The Greater Vancouver Home Builder’s Association (www.gvhba.org). As a general rule, if the price is too good to be true, it probably is. So don’t automatically go for the lowest price.
A professional renovator will work with you to create a detailed budget and timeline for your project so you know what to expect. Once you start selecting materials it is a good idea to take the budget with you to ensure you stay within your budget. There are times that homeowners run out of money midway through the project because they made too many changes along the way or ended up selecting more expensive materials.
On television, renovations are completed withi
n a few short weeks. The homeowners come in and are mesmerized by the transformation. The reality is that sometimes it can take up to eight weeks just for the kitchen cabinets to get built.
Before you start your renovation, prepare a timeline with a renovator so you know what to expect. By doing this, you will have an exact idea how long it will take to do the tasks and therefore plan accordingly.
Also, it’s important to remember that quality, professional renovators aren’t necessarily available right away. Some are booked months in advance, depending on the project. In order to stay on track, materials have to be bought ahead of time and certain items could be out of stock. It might take additional time to get them or in some cases replace them. It is important to remember that even fast projects still take a few months, while bigger projects can take up to a year to complete. Therefore, you need to be prepared.
On most of the renovation shows you have the interior designer come into the home with their assistants and an iPad and start moving walls and design the new space within minutes.
In real life, renovations can be boring because every step of the process is well planned. When it comes to structural changes in the home, such as moving walls, doors, windows or adding additions, a structural engineer may be required in order to obtain a permits. A renovator needs to plan for these type of engineering costs and time delays in order to complete the project.
So when you do your own renovations, it may not have all the excitement that you have seen on the television shows – but we do know this. As long as you take into consideration the above factors, you will be happy with the end result. One that – despite the time, effort and money involved – you will be proud to come home to.