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Is it Better to Remodel or Buy a Home?

August 25, 2022 | Checking and Spending

Times change and families grow, and, after a few years, you might find your current home is no longer meeting your needs. You might have too little living space, or you might need an extra bedroom or a new kitchen.

When major renovations or alterations are on the horizon, it’s worth asking is it better to remodel or buy a new home? Let’s take a look at the practical and financial options.


Buying a new home is tempting. The grass is always greener, right? Here are some reasons why you should consider getting off the fence.

Choose Your Space

No more compromises! Find exactly what your family needs: more space (or less), more privacy, extra bedrooms—maybe even a renovated basement. The choice is yours.

Start from Scratch

Leave it all behind—the drains that back up, the suspect wiring, the maxed-out storage, the carpet from the Ford Administration. It’s just not your problem anymore.

It’s New(er)

You get a kitchen from a recent decade. Possibly stainless steel appliances. Maybe even new floors and efficient heating and finally enough wall outlets to plug everything in.


Hold the phone—there are some downsides to just up and leaving a home you have worked hard to make your own.

It’s Expensive

With interest rates going up, buying a house is not cheap. And unless you have thousands lying around for a down payment, you are probably going to have to sell your old home first.

Loss of Equity

All that equity in your home you have worked so hard to build will be liquidated if you move. You will be back to square one on your mortgage and it will be years before your home is truly yours.

It’s Inconvenient

Moving is expensive and disruptive, especially if you need to sell before you can buy. You will need to clear out that garage and make repairs and upgrades so your place sells.


So maybe this old place isn’t so bad? Let’s remind ourselves what makes remodeling a safe and sensible choice.

Keep Control of Costs

Add in what you want, when you want, and buy the finishes and fitting you can afford. Hire contractors you trust—or do the work yourself and save.

Do It Your Way

You get to make your home exactly the way you like it, not the way the property developer decided. Build for your family’s unique storage needs or space requirements. Make it yours.

Add Value

Smart renovations add value to your home. An extra bedroom is seldom a bad idea, a new kitchen is always a winner. And you are keeping the equity you have right where it belongs.


By now, you may be convinced about which way to go, but before you break out the reciprocating saws let’s just run through a few possible downsides.

Mess and Fuss

Maybe you’re just not that handy. Maybe you don’t want to live for months in a building site or deal with ongoing disruptions while you wrangle with contractors to get your current place right.

Potential Loss of Equity

The wrong renovation can lower the value of your home. For instance, reducing the number of bedrooms in your home is usually a bad idea. Maybe a different place would be better.

Overpricing Your Property

Conversely, too many high-quality add-ons might make your home an unaffordable mansion in a modest neighborhood. In this case, it might be better to move on up.


At the end of the day, expense should be the most important factor guiding your decision. Let’s look at the relative costs of funding your renovation work versus financing a new home.

Buying A New Home

Let’s assume you are going to buy a house a little larger and more expensive than your current home. Not only will you be looking at a bigger property, but rates might be higher than when you bought your original house. This might be partially offset if the equity in your old house allows you to make a big down payment.

You should also consider the costs of:

  • Repairing and selling your home
  • Getting a new mortgage
  • Buying and furnishing your new home
  • Overlapping mortgages or short-term accommodation

Financing a Renovation

To finance a major renovation project, you are probably going to need to take out a home equity loan. This type of financing is sometimes called a second mortgage because it allows you to borrow a percentage of the equity you have earned using your existing home as security.

A home equity loan:

  • Gives you a tax-free lump sum to spend on your house
  • Is repaid at a fixed rate
  • Offers lower rates and longer terms than most consumer loans

All things being equal, if you believe you can pay down both your loan and your mortgage for less than the premium on a mortgage for a new house, then renovating may just be the right choice for you.


At Red River Credit Union we know your home is your biggest investment. We know buying a house or undertaking a major renovation project can be overwhelming, and we work closely with our members to help them reach their goals as homeowners.

Our home financing options include:

Whether you are ready to move or ready to get to work, we have the home financing products you need.

Click below to learn more about our mortgage and home equity loans and other products.


Loans are subject to qualification and credit approval. Financing options subject to change. Other restrictions may apply.

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