“DIY” Renovations, 3 Considerations

Team Gill • June 9, 2016

If you’re a homeowner, the day will come (if it hasn’t already) when you’ll be faced with decisions surrounding home repairs, renovations and upgrades. Why? Because at various points in the life of your house, structural issues will need to be addressed; additionally, your tastes will become more refined and popular decor trends will shift and transform.

… Lots of good reasons to get work done.

But out of the shadows of these potential changes, the following question will inevitably arise, “Do I attempt it myself?” In an age of YouTube and Pinterest, more people than ever are strapping on the tool belt, and looking to handle their own home renovations and repairs; this in lieu of hiring a professional tradesman, contractor or handyman.

Certainly there are potential pros and cons to walking both roads, and as is the case with many things, the answer to this question isn’t black and white, but rather a shade of grey. The following are three things to think about as you consider who will handle your future home renovation(s):

Cost

Obviously, money will be a factor in any decision you make. Most often, the simple truth will be as follows: it will be much more cost effective for you to buy the raw materials and handle things yourself, provided you have the skills necessary to pull it off. On the other hand, if your income can reasonably handle the strain of paying a professional, consider the time and effort that it will take for you to finish that which needs to be done, even if you do feel as though you’re qualified.

Very simply: the cost-to-time ratio has to make sense. If it doesn’t, you may be walking down the wrong road. Although you will no doubt save money by doing the renos yourself, poor-quality work carries a different type of cost.

Quality

Related to the cost of the renovation is the quality of the renovation. Certainly many of us have the ability to swing a hammer. However, in a world where repairs and renovation work must be done well, ask yourself the question, “Is my ‘DIY’ dream taking away from the resale value of my home?”

Will people inspect your work and find it lacking? Will the finished product be a point of pride, or a sore spot? Answering these questions will help you discover how to proceed.

Urgency

Finally, let’s talk about urgency. Does the renovation need to happen quickly? Will the time frame hinder you in terms of gaining the skills necessary to do a good job, and in good time? If this is the case, and the funds are available, consider calling someone who has experience in completing these tasks. Do this rather than risk the farm by jumping into something for which you’re not adequately prepared.

Again: cost, quality and urgency; all things to think about as you consider how to proceed with your home renovations. Remember, there are no wrong answers (necessarily); only misinformed answers. Do the research, ask around, take the time to prepare, and you’ll walk the right renovation road!

In any case, if you would like to look at financing your next renovation project by accessing the equity you have built up in your home, we should talk! Interest rates are at an all time low, and a refinance might make sense for you!

 

This article originally appeared in the June 2016 Dominion Lending Centres Newsletter. 

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Mick & Sheila Gill
CANADIAN MORTGAGE EXPERTS
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Finance Your Home Renovations

By Team Gill • June 17, 2025
If you’re looking to do some home renovations but don’t have all the cash up front to pay for materials and contractors, here are a few ways to use mortgage financing to bring everything together. Existing Home Owners - Mortgage Refinance Probably the most straightforward solution, if you’re an existing homeowner, would be to access home equity through a mortgage refinance. Depending on the terms of your existing mortgage, a mid-term mortgage refinance might make good financial sense; there’s even a chance of lowering your overall cost of borrowing while adding the cost of the renovations to your mortgage. As your financial situation is unique, it never hurts to have the conversation, run the numbers, and look at your options. Let’s talk! If you're not in a huge rush, it might be worth waiting until your existing term is up for renewal. This is a great time to refinance as you won’t incur a penalty to break your existing mortgage. Now, regardless of when you refinance, mid-term or at renewal, you’re able to access up to 80% of the appraised value of your home, assuming you qualify for the increased mortgage amount. Home Equity Line of Credit Instead of talking with a bank about an unsecured line of credit, if you have significant home equity, a home equity line of credit (HELOC) could be a better option for you. An unsecured line of credit usually comes with a pretty high rate. In contrast, a HELOC uses your home as collateral, allowing the lender to give you considerably more favourable terms. There are several different ways to use a HELOC, so if you’d like to talk more about what this could look like for you, connect anytime! Buying a Property - Purchase Plus Improvements If you’re looking to purchase a property that could use some work, some lenders will allow you to add extra money to your mortgage to cover the cost of renovations. This is called a purchase plus improvements. The key thing to keep in mind is that the renovations must increase the value of the property. There is a process to follow and a lot of details to go over, but we can do this together. So if you’d like to discuss using your mortgage to cover the cost of renovating your home, please connect anytime!

Fixed-Rate or Variable-Rate Mortgage?

By Team Gill • June 3, 2025
If you're looking to buy a new property, refinance, or renew an existing mortgage, chances are, you're considering either a fixed or variable rate mortgage. Figuring out which one is the best is entirely up to you! So here's some information to help you along the way. Firstly, let's talk about the fixed-rate mortgage as this is most common and most heavily endorsed by the banks. With a fixed-rate mortgage, your interest rate is "fixed" for a certain term, anywhere from 6 months to 10 years, with the typical term being five years. If market rates fluctuate anytime after you sign on the dotted line, your mortgage rate won't change. You're a rock; your rate is set in stone. Typically a fixed-rate mortgage has a higher rate than a variable. Alternatively, a variable rate is not set in stone; instead, it fluctuates with the market. The variable rate is a component (either plus or minus) to the prime rate. So if the prime rate (set by the government and banks) is 2.45% and the current variable rate is Prime minus .45%, your effective rate would be 2%. If three months after you sign your mortgage documents, the prime rate goes up by .25%, your rate would then move to 2.25%. Typically, variable rates come with a five-year term, although some lenders allow you to go with a shorter term. At first glance, the fixed-rate mortgage seems to be the safe bet, while the variable-rate mortgage appears to be the wild card. However, this might not be the case. Here's the problem, what this doesn't account for is the fact that a fixed-rate mortgage and a variable-rate mortgage have two very different ways of calculating the penalty should you need to break your mortgage. If you decide to break your variable rate mortgage, regardless of how much you have left on your term, you will end up owing three months interest, which works out to roughly two to two and a half payments. Easy to calculate and not that bad. With a fixed-rate mortgage, you will pay the greater of either three months interest or what is called an interest rate differential (IRD) penalty. As every lender calculates their IRD penalty differently, and that calculation is based on market fluctuations, the contract rate at the time you signed your mortgage, the discount they provided you at that time, and the remaining time left on your term, there is no way to guess what that penalty will be. However, with that said, if you end up paying an IRD, it won't be pleasant. If you've ever heard horror stories of banks charging outrageous penalties to break a mortgage, this is an interest rate differential. It's not uncommon to see penalties of 10x the amount for a fixed-rate mortgage compared to a variable-rate mortgage or up to 4.5% of the outstanding mortgage balance. So here's a simple comparison. A fixed-rate mortgage has a higher initial payment than a variable-rate mortgage but remains stable throughout your term. The penalty for breaking a fixed-rate mortgage is unpredictable and can be upwards of 4.5% of the outstanding mortgage balance. A variable-rate mortgage has a lower initial payment than a fixed-rate mortgage but fluctuates with prime throughout your term. The penalty for breaking a variable-rate mortgage is predictable at 3 months interest which equals roughly two and a half payments. The goal of any mortgage should be to pay the least amount of money back to the lender. This is called lowering your overall cost of borrowing. While a fixed-rate mortgage provides you with a more stable payment, the variable rate does a better job of accommodating when "life happens." If you’ve got questions, connect anytime. It would be a pleasure to work through the options together.