A well-designed renovation can transform the home you can afford into the home you need.
When Vancouver artist and precision welder Mark Henderson and partner Meredith Nicole decided it was time to move in together, it was clear that his 1,000-square-foot live-work studio would have to evolve.
“We both work at home, so we both needed to have work environments in the space,” says Ms. Nicole, a wood artisan and the founder of Oden Gallery. “And décor is one of my greatest passions, so we wanted to build a home that feels like a home.”
Add “spacious kitchen and living area, a private space to sleep and be a couple” and “a home that inspires us while supporting us in our creativity and business goals” and you have a daunting wish list for a relatively small space. To make it even more challenging, the couple plans on moving sometime within the next five years. In addition to staying within a low budget, their design had to allow for easy disassembly so the eco-conscious pair can reuse or recycle the reno materials when they move on.
After sitting down together to articulate exactly what they needed the home to do, the creative duo came up with a plan that includes a bedroom raised two feet off the floor to create a private, enclosed space with storage underneath, and an office for Ms. Nicole that is “literally the size of one sheet of plywood.” Raising the office off the floor level allows her work at window level while creating more storage. And rather than using frame and drywall, they used on-trend and affordable raw plywood panels, leaving the screws uncovered for easy dismantling.
“It wasn’t a compromise. It was more like, ‘All right, if we use raw wood, let’s run with that as a theme.’ As well, we’re building my very first walk-in closet,” she says. “I’m super excited about that.”
Ms. Nicole and Mr. Henderson have all the skills necessary to do their renovations themselves, keeping costs low. For the rest of us, planning a renovation as part of a home purchase can make it possible to finance the upgrade as part of our mortgage.
“The two major mortgage insurers in Canada have similar products that enable homebuyers to finance home upgrades,” says Deepak Bansal, a mortgage broker with Dominion Lending Centres in Mississauga.
He points to the example of first-time homebuyers about to purchase a home for $300,000. They’ll need renovations to make it livable, and have had estimates done to determine the cost will be about $30,000. They’ve saved a down payment of five per cent of the purchase price, $15,000. On approval, mortgage insurance renovation options allow the homebuyer to purchase the home with a down payment of five per cent of the renovated value of the home, or $330,000 in this example, and finance the balance.
“If approved, instead of having to fork out $30,000 right away to do renovations, they’ve just financed 95 per cent of that renovation cost,” he says.
One downside is that certain renovations may not be approved or be included in the program, so you may have to cover those on your own, says Mr. Bansal. “We’ve also seen cases where the estimate by the contractor is overstated and the ‘as improved’ value is far less than what expected. The clients are then out of pocket for the difference.”
Your mortgage broker can contact the insurer and lender with estimates to get specific program approval details before you begin renovations, as the process can vary slightly from lender to lender.
Even if only $15,000 of a $30,000 renovation is ultimately approved, it still means you’ve been able to finance 50 per cent of your renovation at a much lower rate than you would pay with an unsecured line of credit, he points out.
Both insurers also provide a premium rebate of 10 per cent if the renovations increase the energy efficiency of the home, even if the renovations occur some time after the insured mortgage is funded, adds Mr. Bansal.
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