For many young buyers, an older house is the only way into the market. Character homes in established neighbourhoods often cost less than new builds, and they come with mature trees, solid bones and room to grow.
They also come with surprises. Foundations, drainage and basements in houses built decades ago can need serious work, and the cost can catch first-time owners off guard. Knowing what to look for and how underpinning financing and other repair financing options work can turn an intimidating repair bill into a manageable plan.
Here is how first-time buyers can prepare for the big-ticket repairs that often come with older homes.
Know the Usual Suspects
Some problems show up again and again in older houses:
- Low or damp basements that are hard to use as living space
- Foundation cracks or signs of settlement, such as sloping floors
- Old drainage, including clay weeping tile and sewer lines that have cracked or filled with roots
- Outdated electrical systems, such as knob-and-tube wiring
- Aging roofs, windows and furnaces
None of these automatically means you should walk away. They do mean you should budget for them.
Get the Right Inspections
A general home inspection is essential, but for older homes it is often worth going further:
- Sewer camera inspection to check the condition of the line from the house to the street
- Structural assessment if the inspector flags foundation concerns
- Electrical inspection if the wiring is original
These cost a few hundred dollars each, which is small compared with the repairs they can reveal, and the results can help you negotiate the price.
Build a Realistic Repair Budget
Once you know what the house needs, sort the work into three groups:
1. Urgent: safety and water issues that need attention in the first year 2. Important: work that protects the house, like drainage or roof repairs, within a few years 3. Wish list: renovations that add space or comfort, such as finishing or lowering the basement
Add a contingency of 10 to 15 percent to any estimate. Older homes rarely reveal everything until walls and floors are opened up.
How People Pay for Major Repairs
Very few first-time owners can pay for structural work in cash. Common options include:
- Adding renovation costs to the mortgage at purchase, where lenders allow it
- Home equity lines of credit once you have built some equity
- Contractor payment plans or financing offered for larger projects such as underpinning or drainage replacement
- Government and municipal programs, such as subsidies for backwater valves or energy upgrades
- Personal loans for smaller projects, usually at higher interest rates
Compare the total cost of borrowing, not just the monthly payment, and be wary of financing with large penalties for paying it off early.
Think About the Payoff
Some repairs simply protect your investment. Others can pay you back. Lowering and finishing a basement, for example, can add a bedroom, a home office or even a rental unit that helps cover the mortgage. When you plan financing, look at which projects add value and which only maintain it, and prioritize accordingly.
Avoid Common Mistakes
- Don’t spend everything on cosmetics first. New floors and paint look great, but they will not help if water is coming into the basement.
- Don’t skip permits. Unpermitted structural work can cause problems with insurance and resale.
- Don’t choose a contractor on price alone. Ask for references, proof of insurance and a detailed written quote.
The Bottom Line
An older home can be a smart first purchase, as long as you go in with your eyes open. Inspect thoroughly, budget honestly, understand your financing options and tackle the important repairs before the cosmetic ones. With a plan in place, the big repairs become just another step in making the house your own.
