Should You Renovate or Move?

It is common for people to want a different home for many reasons. Often, those reasons are simply that they are tired of the existing house, don’t like the layout, finishes are dated and in general they just want a change. The default action in this case is to find a different, but not necessarily new, house and many people see that as moving. What if you could get a completely different house…without moving? 

If you moved to a different house, what would the financials of that look like? What would you have to do? What would be the pros and cons of it?

If you stayed in the same house, reconfigured the layout, updated the kitchen, bathrooms, added an ensuite, etc., what would the financials of that look like? What would you have to do? What would be the pros and cons of it?

Below is an example to help determine what a renovation or a move might look like for you and a list of pros and cons to consider.

Example for an 1800 square foot split level bungalow.​​

Significant Renovation (approx. 1000 sqft)
Move to Another House

Existing home value: $550,000
Current Mortgage: $285,000
Equity: $265,000

Renovation @ $100/sqft: $100,000
HST: $13,300
Cost to live temp for three months w/ storage/moving: $10,000
Total: $123,000

New Mortgage: $408,000
Estimated new home value: $650,000

Equity: $242,000

Existing home value: $550,000
Current Mortgage: $285,000
Equity: $265,000
Real Estate Commissions: $31,075 (incl. HST)
Closing, legal and moving costs: $5,000
Proceeds from sale: $228,925

New home purchase value: $650,000
Land transfer tax: $9,475
Closing Costs: $3,000
Required funds: $662,475

New mortgage: $433,550
Home value: $650,000

Equity: $216,450

Pros and Cons

  • Keep your neighbourhood
  • Brand new finishes of your choosing
  • Reconfiguration to better layout
  • Potential better home equity position
  • Potential lower mortgage amount and lower mortgage payments
  • Potential larger house if needed
  • Need to find temporary housing
  • Some items will need to be put in temporary storage
  • $48,550 outlay of funds added to your mortgage and contributes nothing to the value of your home for the example above
  • Moving (we’ve all done it and we all hate it)
  • Finishes of someone else’s choosing and not necessarily new
  • May still need require some renovation
  • May need to purchase items such as window coverings, new appliance, etc.

Disclaimer: This example is intended for illustration purposes only. It is not advice specific to your situation or a guarantee of positive results, financial or otherwise. Real estate values change, mortgage rates change and each circumstance has unique dynamics which could impact any given situation.