One of the regrets we had with our first home is that in the eight-and-a-half years we lived there we never got around to finishing the basement. We vowed not to make the same mistake when we built our new home nearly three years ago. So after we had the basement framed last summer we decided to hire a contractor and finish off the renovation this spring.
A recent CIBC poll revealed that 40 percent of Canadian homeowners planned to renovate their home in the next 12 months, with the average price tag coming in around $20,000.
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Our $35,000 basement renovation
The basement renovation will cost us about $35,000 including furnishings – money we had to borrow on a home equity line of credit at 3.5 percent to get started. Once complete we’ll have 850 square feet of extra living space, including a family room, two bedrooms, and one bathroom.
We picture using the space for movie nights, entertaining friends after the kids go to bed, a weekend hideaway for dad to watch football, and sleepovers for the kids and their friends. A spare bedroom will come in handy for when friends and relatives come to visit, and eventually our girls will want to move their bedrooms downstairs to get away from mom and dad.
Our old place was a 4-level-split with two bedrooms and one bathroom on the top level. It worked out great for a starter home and with no plans to have kids in the immediate future we didn’t see the need to finish off the basement for extra space.
Unfortunately that meant the basement became a storage room for all the stuff we collected over the years. Frankly it was a disaster down there and when it came time to move we had to work hard to declutter and clean up the mess.
One of the pitfalls of new home construction is that you typically don’t get a basement or a yard. Last summer we spent a good chunk of time and money on fences and landscaping. This year we planned to tackle the basement in stages as our budget allowed for electrical, plumbing, drywall, and finishing.
I’m a good DIY investor but I make a lousy handyman. Rather than filming my audition for Canada’s Worst Handyman, my wife found the design she wanted for the space and we hired a contractor based on a recommendation from our home builder. We realized that piecing this project together would take a long time because while we saved up for a new phase, the contractor might be onto a different project and need time to circle back.
We met with the contractor and found a window of time to complete the entire project within a few weeks. The basement has been wired and plumbed, fireplace installed, and drywall will be put up this week.
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So now instead of paying cash as we go we’ll end up making monthly payments toward the balance on our line of credit. I revised my annual budget and it looks like we’ll owe $17,000 on the HELOC at year end.
It made more sense to pay off the HELOC at 3.5 percent rather than our mortgage at 2.2 percent, so we’ve scaled back the extra mortgage payments for now. We’ll make it a top priority to pay off the line of credit in full by the end of 2015, and then resume our accelerated mortgage pay down.