You are desperate for more living space and now face the big decision -- renovate your current home, or buy another one?

Chartered Accountant Gerald Tracey, an Investment Advisor with ScotiaMcLeod, advises that this decision should be a two-step process.

"The current economic downturn makes it even more critical to look ahead and consider different scenarios. Both renovating and buying have pros and cons, and both are stressful, so make the bigger decision first -- decide what you want and where you want to live. Then decide whether to renovate or buy. If you like your current neighbourhood, renovation may make sense, provided that the renovated value of your home is in line with the values of other homes in your area."

"Three key factors are also important to consider in making this decision," adds Chartered Accountant Albert Yu. "Financial costs, non-financial costs and resale value."

From the financial perspective, one simple rule is to determine what it will cost to move. This cost generally equates to about 10% of the current value of your home and includes real estate commissions, land transfer tax, and moving and legal costs. Compare this cost to the cost of renovating, and if renovating is less then take the less expensive route.

"However, homes are much more than dollars and cents, so you should also think about the non-financial costs of relocating either yourself or your family -- including the stress and upheaval involved in a potential move and the time it will take you to find services and professionals in your new community," Yu says. "If you do have children, consider how a new school, with new friendships will impact the kids.

"Your home is one of the largest investments you will ever make. So its resale value is always a major consideration."