Is your bathroom in need of some renovations?
Perhaps you’re looking to update your master bathroom or add a new bathroom in your basement.
Whatever the case, did you know that you could use your home’s equity to help pay for these renovations?
One of our clients’ favourite ways to leverage their biggest asset – their home!
There are a few steps you need to follow to use this money, so read on for tips on making the most of it!
Step #1: Understand your home’s equity and how it can be used for renovations
Let’s get right to it…
The current equity in your house is the market value today minus the current mortgage balance.
This will include the down payment as well as the appreciation over time. Let’s keep it simple for an example – if you purchased the house in 2015 for $500,000 and got a mortgage with 5% down ($25,000), the net mortgage amount, including insurance premiums, will be $494,000. Based on the average yearly growth rate of 15.6%, the property should be worth anywhere around $700k – $800k today.
A great investment you would have made!
So how much equity (aka profit) did you make? Let’s say the house is worth $750,000…
$750,000 market value – $494,000 current mortgage = $296,000 equity.
That’s definitely more than enough equity to work with for your renovation.
With that equity sitting in your home, you could use that money to pay for your renovation.
To confirm the equity in your home, we’d suggest speaking with your mortgage agent, who will help you determine the exact amounts for your situation.
Step #2: Calculate the amount of money you need for your renovation project
Now that you understand how equity works, the next step would be to determine how much money you’d need to complete your renovation.
Ask yourself, do you want a quick refresh to modernize your bathroom? A quick refresh might include new paint, new hardware on cabinets and doors, and new light fixtures.
You could also completely transform the space into something new. This might include a complete bathroom gut & remodel which means changing the footprint of the existing bathroom.
Or do a brand new bathroom in a space that doesn’t exist just yet. This would be starting from scratch in terms of construction and would need more significant financing.
Before jumping into a home equity loan, take some time to consider what you hope to achieve with your renovation and how much it will truly cost.
We help our clients with this aspect during our Fact-finding meetings. This is where we figure out your needs to be able to provide the estimated budget.
Please click here to book a fact-finding meeting if you are looking for help with this.
Step #3: Get pre-approved for a home equity line of credit (HELOC)
Once you have a clear idea of your budget, the next step is to go back and speak with your mortgage agent.
They would be able to set something up for you called a home equity line of credit (also known as HELOC).
A home equity line of credit allows you to borrow against the equity you have built up in your home and use the money as you need it.
The interest rates are usually lower than other types of loans, and you can choose how long you want to pay it back.
However, there are some things to keep in mind before getting a HELOC.
First, your mortgage agent will need to re-evaluate your home to ensure it is worth enough to qualify for a HELOC.
Second, you will need to be sure that you can afford the monthly payments and the upfront costs associated with getting a HELOC.
But if you do your research and speak with a mortgage specialist, a HELOC can be a great way to finance your bathroom renovation project.
Step #4: Finalize Your Project Design
Once your financing is all sorted, the next step is fun! We love the design and strategy side of the renovations.
This is where we take your vision, design your space, and choose all your products before we move on to the physical renovation.
The design process is important because it helps us create a space that is both functional and beautiful.
We work closely with you to understand your needs and develop a plan that meets those needs during our design consultation.
We also consider your budget and make sure that we are using materials and products that will last.
After the design is complete, we move on to the physical renovation. This is where the real work starts, but it’s also where we see your vision come to life!
Step #5: Enjoy your new and improved bathroom!
After months of construction and a sizable financial investment, it’s finally a relief to have the project complete.
The stress of the renovation process is over, and now you can enjoy your new oasis.
With its sleek finishes and updated fixtures, your bathroom is sure to be a source of pride for years to come.
Whether you’re relaxing in the bathtub or getting ready for your day, you can now do so in comfort and style.
Thanks to your hard work and dedication, your dream bathroom is finally a reality.
So there you have it!
A guide on how to use your home equity to renovate your bathroom.
By following these simple steps, you can be well on your way to enjoying a beautiful and updated bathroom.
If you would like more information or have any questions, please don’t hesitate to book a free consultation call with us today.
We would be happy to help get you started on your renovation journey.