- Adding financial value to a home isn’t the only reason to renovate.
- Enjoying your space while you live there and maintaining your home’s value are other reasons to renovate.
- Depending on the renovation or update to your home, your home insurance rate may change.
Are you taking a critical eye to your house and considering what areas could be improved? Maybe the warm weather (or the pandemic) is prompting you to invest in a pool, deck, or landscaping to expand your outdoor living space. Maybe you’re thinking about new fencing to shield yourself from the prying eyes of neighbours. Perhaps, instead, your focus is inside, and you’d like to revamp your kitchen or finish the basement.
Whatever the project, everyone naturally expects a renovation or upgrade to add value to the home.
For many people, "adding value" means increasing the home’s worth (in which case, you may have to update your home insurance policy to ensure you have adequate coverage). However, according to the Appraisal Institute of Canada (AIC), there are three ways to measure the value of a renovation. There’s the value of:
- Increasing the selling price of your property,
- Enjoying the renovated space while you live in the home, and
- Maintaining the worth of your property.
1. Increasing the selling
Many renovations add to the overall value of your property, especially kitchen and bathroom remodels. However, if you’re planning to sell your home in the next year or so, the AIC recommends that you consider improvements that are smaller and less expensive. Specifically, they suggest focusing on a fresh coat of paint, updating lighting and plumbing fixtures, improving the curb appeal, and decluttering.
2. Enjoying the renovated space
Many homeowners undertake renovations to make their space more livable. This is likely truer today than ever before.
Enjoying the space where you live is important to making your house a home, and while renovating your bathroom or kitchen may increase your home’s value, it also brings enjoyment. Additionally, the AIC lists the following as the top five renovations with the highest enjoyment value:
3. Maintaining the home's worth
Maintenance projects won’t likely increase the sale value of your home but rather maintain the sale value. The AIC lists the following as the top five renovations to maintain your home’s worth:
- Replacing the roof
- Updating the heating and cooling systems
- Replacing windows and doors
- Updating the home’s electrical (panel and wiring)
- Repairing structural defects
Whatever the renovation, keep your home insurer in the loop
Before doing any major renovations to your home, make sure you give your home insurance provider a call. This will help ensure you’re adequately covered during the upgrades and after they’re completed.
Depending on the renovations you take on, your home insurance premiums may change. If you are increasing the value of your home, your premiums may also increase (to reflect the added coverage needed). However, if you’re adding, let’s say, a security system, you may see savings. In any case, whether your premium goes up or down after the renovation, compare home insurance quotes to ensure you’re getting the coverage you need at the best available price.