Blog/Financing/How to Budget for a Home Renovation

How to Budget for a Home Renovation

Jun 30, 2022
7 min read
  • Homeowners planning and budgeting for their renovation project

Start your renovation today

Explore lending options

A home renovation can be both exciting and stressful. There’s the fun of scrolling through Instagram and TikTok for design inspiration, pinning your favourite photos to your Pinterest mood board, and stockpiling your favourite shelter magazines. But then there’s the actual planning, which includes finding the right contractor and creating your home renovation budget.

Proper budgeting is important because even the most cost-conscious homeowner can get carried away by the excitement of choosing new appliances and debating the merits of marble versus butcher block countertops

Your house renovation budget serves as the foundation of your entire project as it determines how much money you need, where you’ll spend it, and the quality of materials and contractors you can afford. If this sounds overwhelming, don’t worry, we’ll walk you through the process below.

How much does it cost to renovate a house in Canada?

The average cost of a home renovation in Canada is $100-$200 per square foot. This includes demolition, framing, wiring, and insulation, but doesn’t include costs like appliances. So if you live in a 2,500-square-foot home, you can expect to spend anywhere from $250,000 to $500,000.

Costs do vary based on demand, time of year, material availability, and of course, the scope of the project itself. (Renovating an old house on a budget afterall, might be a bit more challenging than a newer home in good working order.) 

Labour costs may go up during spring and summer for outdoor renovations, and the fluctuating cost of materials will also affect your budget. For example, the price of lumber skyrocketed during the pandemic due to supply line disruptions, high demand from homeowners, and wildfires in British Columbia. These are all important factors to keep in mind if you’re focused on budget home improvements.

Determine how much you will spend on your home renovation

Now that we’ve covered the overall cost of a home renovation, let’s talk about how much you should budget for a home reno.

To avoid overspending on your home renovations, it’s important to consider your future plans. If you plan on staying in your home for several years, you should spend as much as it takes (within your budget) to be happy in your space.

However, if you plan to sell your home in the near future, your main focus shouldn’t be on your personal enjoyment, but on maximizing your renovation investment. That said, spending $50,000 on a renovation doesn’t guarantee you’ll get an extra $50,000 when you sell your home. Your home may sell faster due to your renovations, but ultimately its price is still set by market demand and comparables in your area.

How to create a home renovation budget

Prioritize renovation needs

To create your home renovation budget, start by writing out exactly what projects you want to do (or have done), prioritize them in order of importance, and start pricing them. If you’re not sure how to price certain materials, Smart Reno’s Home Renovation Cost Estimator is a great place to start.

Things to price in your home renovation budget include:

  • Materials like lumber, countertops, tiles, flooring, windows and paint.
  • Appliances: stove, fridge, television, etc.
  • Finishings like backsplashes, taps, door knobs and crown moulding.
  • Electrical work. Do you need to replace knob and tube wiring or do you want to install pot lights?
  • Plumbing.
  • City permits.
  • HVAC installation.
  • Labour costs, including the cost of working with a designer.
  • Relocation costs if you have to stay somewhere else like a hotel or Airbnb during the process.
  • Food costs if your kitchen is out of commission during the renovation.
  • Cleaning costs after the renovation to remove dust and dirt.

Create a detailed renovation plan with costs 

There are several ways to figure out the costs associated with your home renovation plans. Start looking at home renovation sites and home improvement retailers to get a rough idea of how much materials and appliances will cost, and write down the amounts. This should include high-, medium- and low-cost options so you can easily adjust your budget as necessary. 

You can also research with Smart Reno’s renovation cost estimator, which provides an estimate based on the size of the project, your location and the type of materials (economic, standard or high-end). This will help you decide where you want to splurge and where you want to save. For example, a small powder room remodel can cost as little as $10,000 but can balloon to north of $50,000 for an ensuite upgrade. 

They may not be as glamourous as shiny new appliances or a brand new layout, but don’t forget about permit costs. You can find these on your municipality’s website.

Read More: 5 essential tips to help you plan a home renovation

Get quotes from contractors

You want to take your time before you commit to anything. After all, you don’t want to be the subject of a renovation-gone-wrong article.

Before you start making calls, look up each contractor and read their reviews, not only on their personal website, but also on external sites like the local Better Business Bureau (BBB). Are there any recent complaints? What were they and how did the contractor react or rectify the issue?

Smart Reno can help you find already-vetted contractors who are qualified and meet a high performance and quality standard. Our pro network have all been verified, have undergone background checks, have had their certifications and licenses checked and have positive reviews about their previous work. Plus, you can get a minimum of three free, no-obligation renovation quotes on a project. 

Once you create your shortlist, ask each contractor questions like:

  • How much will the renovations cost? This is where your prioritized list comes into play. You may want to invite the contractor over to walk through your space. This allows them to see and better estimate the costs. It also gives you the chance to do a vibe check. If anything doesn’t seem right, don’t work with them.
  • What are their responsibilities? Will they get the necessary permits? Will they pick up appliances, etc., or will you have to do that?
  • What’s their timeline? How long will it cost to complete in the best and worst case scenarios?
  • What are their follow-up policies on fixes such as scuffed paint or banged up walls?
  • Do they have insurance and, if so, what kind? Smart Reno ensures that all  contractors have valid liability insurance before they join its network. This is important in case anyone gets hurt on the job site. They should have provincial worker’s compensation and insurance for their tools and for their team. You may also want to talk to your insurance provider to see if your policy covers damage to your new appliances or injury to anyone on the job site. If you do need to take out additional insurance, make sure to add it to your budget.

Get all quotes in writing and keep track of them. This will help inform your budget and you can also see if quotes are consistent among all the contractors. If one quote is much higher or lower than the average, don’t hesitate to ask why.

Enter the numbers into your spreadsheet. This is when you should see your total costs. Generally speaking, most renovations run over budget, so add in a cushion of up to 20 per cent in case you end up needing something unexpected like pipe replacements or emergency foundation work.

Read More: How to choose a contractor for your renovation 

How to finance your home renovation 

Once you’ve determined costs, it’s time to figure out if they fit your budget and whether you need financing to move forward. You may want to consider RBC Home Renovation financing options for projects of all sizes. 

For smaller projects under $5,000, you can opt to pay cash out of pocket or put charges on a credit card that offers cash back.

For medium-sized projects over $5,000 and taking place in the next couple of years, options include taking out a personal loan at a competitive interest rate or a secured or unsecured line of credit. The advantage of a line of credit is that it’s reusable so once you pay it off, it’s there for future renovation work.

For bigger projects like a partial or whole-home renovation that require a significant amount of money, RBC offers secured lines of credit.

Additionally, the RBC Homeline Plan allows you to tap into your home’s equity through combining your RBC mortgage and credit line. 

Read More: How to finance your home renovation.

Whatever type of renovation you’re planning, take the time to do your due diligence and plan your budget so you can get back to enjoying the process rather than worrying about unexpected financial hurdles. Less time fretting about costs means more time daydreaming about that perfect steam shower.   

With so much to think about when it comes to budgeting for your home renovation project, ensure that you hire the right professionals for the job. Smart Reno can help you get up to 3 free renovation quotes from trusted contractors, and talk to an expert about renovation financing.


Calculate the cost of your home renovation project with our cost estimator

Get an Estimate
Things our lawyers want you to know