Today’s low interest rates are a double-edged sword for homeowners who want to move up. On the one hand, mortgages are available at bargain rates. On the other hand, real estate prices have skyrocketed in key centres across the country.

Many homeowners have turned to renovation as a cost-effective alternative to a new home. In addition to sprucing up your home and making it more attractive to inhabit, the right renovations can increase its resale value.

According to the most recent (1999) Renovations and Home Value Survey conducted by the Appraisal Institute of Canada, here are the top 10 reno projects, along with the average potential “payback” when the home is sold (expressed as a percentage of the cost of the reno):

Painting and decor, interior – 73%

Kitchen reno – 72%

Bathroom reno – 68%

Painting, exterior – 65%

Flooring upgrades – 62%

Window/door replacement – 57%

Main floor family room addition – 51%

Fireplace addition – 50%

Basement renovation – 49%

Furnace/heating system replacement – 48%

Paying for the renovations

If you are making modest renovations on your own, paying for the materials with your credit card may make sense – provided you pay your balance monthly.

For more extensive work, resist the temptation to draw cash advances on your cards. A personal line of credit is a much more cost-effective way to get the cash you need. Drawing on a personal line of credit has another advantage: you pay interest only on the amount borrowed. This can be particularly useful when paying a contractor in stages.

For major renovations, you may want to tap into the existing value of your home.

This article was provided by ScotiaBank. The CMHC website has a comprehensive section on home renovations. Go to the Building, renovating, and maintaining section. Let ScotiaBank help you get the upper hand on your home financing. Visit scotiabank.com/upperhand for great tips, calculators and more. Want to get more information on your home-related financing goals by email? Sign up here .