Many Canadians are making financial sacrifices to complete home renovations this summer. As a result of their planned renovations, nearly one-quarter say they are not paying down debt as fast as they should be, 25% aren’t saving enough for emergencies, and 21% are not saving enough for retirement as they focus on renovating their home, according to a new Ipsos poll conducted on behalf of BDO Canada Limited.
And, should those renovations go over budget, most renovators would choose to spend more rather than put the work on hold. Nearly half (44%) would dip into savings to cover the extra costs, while 15% would take on more debt.
“Ideally, you want to avoid carrying a large debt balance over several months,” says Doug Jones, President of BDO Canada Limited. “With interest charges adding up each month, you could be paying back much more than you originally spent. We would suggest that Canadians focus on saving for retirement and reducing their existing debt rather than taking on more debt for home renovations.”
And due to a rapid increase of house prices, many Canadians are using an increase in home equity to justify spending on a renovation, yet “the problem is many people don’t move when they retire,” he says.
“Every day, we see seniors coming into our office carrying debt into retirement.”
Jones advice: “It all comes down to budgeting. Before renovating, create a budget and ask youself if I can afford this renovation.”
Among key poll findings:
- Across the country, 57% of homeowners say they’re likely to renovate in the next year, with Quebec (72%) and Ontario (61%) having the highest number of households considering a renovation. On the other hand, only 40% of homeowners in the Atlantic provinces are considering renovations.
- On average, Canadian homeowners plan to spend $16,439 on their home renovations. Albertans anticipate spending the most on their renovations ($22,586 on average), while those in Saskatchewan and Manitoba anticipate spending the least ($11,934 on average).
- Quebecers will finance the largest portion of their renovation with debt (31%) while those in Saskatchewan and Manitoba will use the least amount of debt (20% of the renovation cost). Homeowners relying on debt think it will take them a little more than two-and-half-years (30.6 months) to pay off debt.
- Four in ten Canadians (42%) say they haven’t set a renovation budget yet, but that they intend to, while 9% have no intention of budgeting. Atlantic Canadians are most likely (19%) to say they haven’t budgeted and won’t do so. They’re also the most likely to use a credit card to pay for their renovations (23% vs. the national average of 13%).
This article was republished with permission from the Toronto Sun