How much do home renovations cost
Image source: Shutterstock

How Much Do Home Renovations Really Cost?

Advertiser Disclosure This article/post contains references to products or services from one or more of our advertisers or partners. We may receive compensation when you click on links to those products or services.
Last updated on March 10, 2023 Comments: 26

When I moved into a heritage home, I balked at its small, outdated bathroom. It had to go pronto.

Without talking to a contractor about home renovations, I naively budgeted $15,000.

I was so wrong. About $27,000 later, I had bought myself a beautiful bathroom and a pricey lesson in the world of home makeovers.

According to the 2019 CIBC Home Renovations Poll, 49% of Canadians planned to renovate their homes that year, budgeting $10,211 on average. Among those who completed recent renovations, 39% went over budget, demonstrating how out of control renovations can really get. How much should a house renovation cost? Where should homeowners prioritize their spending, and what steps can they take to finance the project intelligently?

Why Renovate?

Renovating a heritage home

My heritage home. Gorgeous facade, but the interior needed some work.

Some homeowners (like me) choose to renovate because they plan to live in their homes for many years and want a beautiful, comfortable space for that lifestyle. For others, it makes pure fiscal sense. Add up land transfer taxes, legal fees, realtor fees, penalties for breaking a mortgage, and miscellaneous moving costs, and it may actually be cheaper to sink $50,000 into renovations than to buy a new property.

“Unless you’re in your retirement years and trying to downsize your home, you’re more than likely trying to get a bigger house, which means more money,” says Krista Salter, a leading Canadian interior designer. “For some people, the cost of renovating equals out.”

Most importantly, home improvements can increase the value of a property. For example, a kitchen or bathroom renovation can boost the value of your home by between 75% to 100% of what you spent. That means that if you own a $500,000 home and update the bathroom for $25,000, your house would then be worth between $518,750 and $525,000, recouping most of your renovation costs. Consider it an investment.

Related: The Best Ways to Invest in Canadian Real Estate

Where to Start?

If you don’t have a wad of cash to make over your house from top to bottom, focus on the renovations that add the most value to your property. Home renovations that generate the highest return on investment are kitchens, bathrooms, interior/exterior painting, decluttering, and updating décor.

“On the real estate market, those equal dollars,” says Salter. “It’s the first thing people see and want. It’s going to make your house more valuable and more appealing.”

One caveat: Watch out for “over-improving.” Depending on the real estate market and area, adding unnecessary, over-the-top finishes or creating unique features may not fetch the best financial return. For instance, dropping $65,000 to upgrade your basement when homes in your neighbourhood sell for $200,000 isn’t a wise choice. Adding a pool or wine cellar might actually turn off some buyers. When planning a project, research what houses are currently selling for in your neighbourhood and tailor your budget and expectations accordingly.

Renovation ROI*

Home renovation ROI Canada

*The percentage of your cost that you may recover when you sell your home
Data source: The Globe & Mail and Ontario Securities Commission

ROI aside, always prioritize pressing “911” projects first. For instance, tackle the leaky roof, crumbling brick, or dying furnace ASAP before moving on to renovations that have aesthetic value. Can’t afford a major home renovation? Luckily, there are plenty of budget-friendly alternatives that can boost your home’s appeal without costing a fortune.

“The easiest things are to paint, change your kitchen backsplash, or paint the kitchen cupboards,” says Salter. “Put in some pot lights and add storage with build-ins to give a new look and function for the space. Even simple things like adding drapery or decorative elements can change your space.”

What Factors Influence Cost?

When calculating costs, consider how these factors may influence your budget:

  • Age. Renovating a 100-year-old house may unearth unwelcome surprises (think: knob-and-tube wiring, asbestos, lead pipes, etc.).
  • Size. Larger space = more money.
  • Labour quality. Are you hiring a reputable contractor with insurance and credentials? Or a local handyperson who does side gigs?
  • Complexity. It’s usually bigger bucks to bust down walls, re-arrange plumbing or electrical systems, or add an extension.
  • Timeframe. If you plan to sell soon, your best bet may be smaller, less expensive improvements that will freshen up your house, such as painting or improving curb appeal.
  • DIY versus hiring a contractor. “Do it yourself” saves money and requires expertise and a considerable time commitment. As Salter says: “It’s way cheaper, but who really wants to do it themselves?”
  • Fixtures/finish quality. A basic bathtub from Costco can cost as little as $400, whereas a Victoria and Albert clawfoot tub can run as high as $7,000.
  • Other costs. Factor in designer/architect fees, building permits, costs associated with temporary relocation, appraisals, and a fund for emergencies. To be safe, experts advise you to tack on between 20% to 25% on top of your budget to handle unexpected costs.

How Much Should Be Budgeted?

“There’s no perfect number,” says Salter. “Because everyone’s house sizes are different, the amount of work is different.”

A general rule for homeowners is to budget 1% of a home’s value each year for ongoing maintenance and improvement. For example, if you own a $500,000 property, set aside $5,000 each year into a high-interest savings account (HISA). That way, you’ll have the dough on hand if you need to renovate unexpectedly.

For the sake of planning, here’s a breakdown of what it generally costs for the home improvements with the highest return on investment.

Kitchen Renovation Cost: $25,000 to $50,000

According to the Appraisal Institute of Canada, the average amount homeowners should spend on kitchen renovations is up to 10% to 15% of the overall value of their home. But if you’re renovating the kitchen for your “forever home” and plan on staying for more than five years, you can safely stretch the budget to 15% to 25%.

Kitchen renovation

Photo courtesy of Krista Salter

“Realistically, I would say the average amount for a kitchen would be $50,000,” says Salter. “A $35,000 kitchen renovation is cheap. We’re talking about appliances, countertops, a contractor, cabinetry—all of those things add up extremely quickly. It all depends on your finishes.”

Bathroom Renovation Cost: $20,000 and Up

The average cost to renovate a bathroom factors in updates to the bathtub, shower system, toilet, vanity, sinks, faucets, tiles, flooring, countertops, light fixtures, windows, and labour. It could also involve moving fixtures, plumbing, electrical work, or knocking down walls to change the layout.

According to experts, you should budget up to 5% of the value of your home for a bathroom reno.

Painting Cost: $10,000 and Up

A fresh coat of paint does a world of good, offering an easy and inexpensive way to enliven a room. Cost depends on the size of your space, quality/brand of paint, and labour expenses (usually $1 or $1.50 per square foot).

Basement Renovation Cost: $10,000 and Up

Basement renovations generally don’t come cheap. “If you’re just adding carpet and paint, it could be $8,000,” says Salter. “If you’re reconfiguring the whole thing and adding an extra ensuite, that’s a different animal.”

Tuning up a basement can involve installing drywall, insulation, flooring, lighting, and creating storage and moisture-proofing the space. If adding a bathroom, kitchenette, heating/air conditioning, cabinetry, and electrical upgrades, you could end up with a bill for as much as $50,000. For those on a budget, focus on creating a multi-purpose room that’s moisture-proofed to the nines.

How to Finance Home Renovations

Not everyone has money lying around for a major home renovation, thus necessitating some smart financial planning in advance of the reno. Here are a few strategies for financing a project of this magnitude and minimizing the amount you’ll shell out for it.

Save Up

While digging into your hard-earned savings may be painful, it will likely be more prudent than borrowing. The interest you can earn on a good savings account or GIC will max out at the 1% to 2% range; interest paid on borrowed funds will likely exceed that. If you already have a high-interest savings account to park your renovation money, check to make sure its interest rate is competitive with the accounts offered by top virtual banks, like the EQ Bank Savings Plus Account. You can then use forecasting features in budgeting apps like PocketSmith to get an accurate picture of how long it will take you to save up the money you need for the reno. Just avoid tapping into your emergency fund for purely cosmetic renovations; you’ll need that money one day for necessary repairs.

Personal Loans for Home Improvement

If the anticipated cost of your home renovation exceeds the savings you’ve tucked away, you can consider borrowing some money to close the gap. Personal loans typically have fast approval times, low maximum loan amounts, and a short repayment schedule (usually one to five years), making them a good fit to finance small-scale renovations. Even if your anticipated loan amount is small, you should shop around to get the best loan rate possible; every 10th of a percent in interest means more money you’ll pony up. You can save yourself some research time by using a good loan comparison site like Loans Canada or LoanConnect rather than checking lenders one by one yourself. Just verify that your credit score is in good shape before you borrow money, as your score will significantly influence the interest rate you’re offered.

finance home renovations

Image Source: Shutterstock

Mortgage Refinancing

If you already have substantial equity in your home, you might consider a cash-out mortgage refinance rather than a standard personal loan. This is especially appealing if you plan to do a major renovation and if interest rates have dropped since you took out your current mortgage. You can use a digital mortgage broker like Breezeful to compare terms from various lenders and to calculate whether or not the new interest rate you’ll get from refinancing is worth the new mortgage’s associated closing costs.

Credit Cards

Credit cards typically have higher interest rates than a good personal loan or mortgage and should generally be a last resort if you need to borrow money for a renovation. That said, a few balance transfer cards offer very low interest for a limited time (usually six months to a year) and, in some circumstances, could present the cheapest method of borrowing for small renovations. Just be absolutely certain you’ll be able to pay off the charges before the card’s promotional period ends, at which point the interest on the transferred balance will increase. Another option is to use a credit card that allows for low-interest installment payments over time, a feature offered by a number of MBNA credit cards.

If you are confident that you can pay back your renovation costs entirely from your savings, making renovation purchases with your credit card can be a great way to supercharge your cash back. Some cards, like the Tangerine Money-Back Credit Card, can earn high rates of cash back specifically for home improvement costs. Others, like the Rogers™ World Elite® Mastercard®, have high base earn rates on all purchases, including renovations.

Grants, Loans, and Rebates for Energy Efficiency Upgrades

Canadian federal, provincial, and municipal governments—as well as local utility companies—offer grants, loans, and rebates for energy-saving renovations. For example, Toronto homeowners can get a low-interest loan of up to $125,000 to cover the cost of home energy improvements through the Home Energy Loan Program. You can also search by province to see what financial incentives or programs are available. Recently, I got back several thousand dollars for insulating my basement crawlspace and upgrading to an energy-efficient furnace, water heater, and air conditioner.

Author Bio

Lisa Jackson
Lisa Jackson is a freelance personal finance and travel journalist, editor, and blogger who contributes to various online and print media outlets in Canada and abroad, including The Globe & Mail, Toronto Star, Islands Magazine, Fodors, BRIDES, Huffington Post Canada, CAA Magazine, The Food Network, West Jet Magazine, NUVO Magazine, and many others. When she's not writing from her home office, she's busy globe-trotting to new destinations in search of her next story.

Article comments

Jason Trembley says:

Flooring cost range?

Daniel from GreedyRates says:

Hi Jason,
That’ll really depend on your project, material selection and preferences. Carpet can cost less than vinyl, which can cost less than laminate, which can cost less than hardwood. Costs will also vary if you’re looking to have it installed by a contractor or going the DIY route. Best shop narrow in on your options to get an idea of your flooring cost range.

Jeannette Floyd says:

Lisa. Your article is being shared by q company here in Kingston. One of the owners of that business defrauded us of $thousands under his last company name. They misrepresented themselves throughout. In the end we discovered they couldnt provide the industry standard warranty because the owner was an ex convict. They received 100% payment for the finished product and left us with only 30% completed and much of that had to be fixed by real trades people. I think ours is a story that needs to be told to protect other seniors from losing their retirement to crooks

Daniel at GreedyRates says:

Hi Jeannette,
Thanks for sharing your experience and the warning. Sorry to hear that it was so unpleasant. Could you help clarify who you mean by q company? Consider reporting your experience to the Better Business Bureau and leaving online reviews as a start to helping warn other seniors to stay away.

landscaping Chch says:

It is one of the best write up on how much do home renovation really cost. Before hitting on the other blogs I would request all to give a try here to get the best available content here. The article is much informative regarding work as well.

Aaron Broverman says:

Thank you so much. We aim to please.

earthworks Auckland says:

All the things about how much does the home renovation really cost. This article mentions and acts as such a moving trigger. It is an article worth applauding for based on its content. I am sure many people will come to read this in future.

Aaron Broverman says:

I hope so. Thanks Earthworks Auckland

two post says:

It’s a great source of knowledge; I think it will be helpful for lot of people who are looking for how much do home renovations really cost . Thank you very much for sharing this article, this is really helpful for me, thanks again!

Aaron Broverman says:

You’re welcome two post,
We aim to please and are always happy when our readers are happy.

Digger Hire Otago says:

I loved your blog and thanks for publishing this content about how much do home renovations really cost!! I am really happy to come across this exceptionally well written content. I like how you have researched and presented these exact points so clearly. Thanks for sharing and look for more in future!!

Aaron Broverman says:

Thanks so much, we work hard and appreciate the praise. Thanks so much.

Certified Builders Auckland says:

These are some great information that you have shared herehow much do home renovations really cost. I really loved it and thank you very much for sharing this with us. You have a great visualization and you have really presented this content in a really good manner.

Aaron Broverman says:

Thanks certified builders, we aim to please and we love getting recognition for it. Thanks for reading.

Earthmoving Kerikeri says:

This is such a nice blog on how much do home renovation really cost. This article provides us true and insightful information regarding it. This article is very helpful. I am sure many people will come to read about it in future. You have done an excellent job with this content I must say.

Aaron Broverman says:

Thanks Earthmoving,
I’m glad we were able to help. The only thing now is to get the supplies and start your renovation thanks to our article. In all seriousness, your comments are so meaningful. People like you is why we do what we do. We’re about great, practical advice and words like yours keep us going.

glass balustrade christchurch says:

Here we get to know about how much do home renovations really cost/ information in detail. It helps us to decide that which one is best among its types. I enjoyed reading this article and would suggest others it as well. Thank you for this article! This is really very informative for us.

Aaron Broverman says:

Thanks glass, this type of compliment is music to my ears. Thanks so much, informative is what we strive for.

Central Vacuum Systems North Shore says:

Hi, thank you for such a brilliant post. I have been reading some blogs that gives me more knowledge about how much do home renovations really cost. I must say this is one of the best among them. You have done a great research for I feel, thanks for sharing.

Aaron Broverman says:

Thanks Central, we pride ourselves on our research and we’re glad you learned something from all of this. Thanks for such kind words.

electric and automation NZ says:

I loved your blog and thanks for publishing this about how much do home renovations really cost !! I am really happy to come across this exceptionally well written content. Thanks for sharing and look for more in future!! Keep doing this inspirational work and share with us.

Aaron Broverman says:

Thanks Electric,

We very much appreciate the comment and we work hard every day in order to here words such as yours. Keep reading and thanks again.

Master Builders Christchurch says:

It’s interesting to read what other people thought about how much do home renovations really cost and how it relates to them or their clients, as their perspective could possibly help you in the future. I really hope it will be helpful to many. Appreciative content!!

Aaron Broverman says:

Thanks Master,
We appreciate the love and glad you liked the article. We work hard on them.

Nancy J. Ford says:

I had great experience with them, keep it up the good work great Article.

Aaron Broverman says:

Awesome, we’re so happy for you Nancy. It’s always nice to hear our readers having positive experiences from the things we highlight.