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'How should I properly insulate my unfinished basement?" That's one of the most popular questions I get asked by readers. One, from Longlac, Ont., wrote in to ask how far he had to go down his basement wall with interior insulation. He'd been told different things by various contractors he'd had in to quote on the job - but the general advice was that he only had to go two feet below the outside grade.

No! This is not only wrong, it will lead to problems in the long run. I guess those contractors were thinking that the temperature of soil below the frost line remains fairly constant year round. It's the upper part of your basement that has wider fluctuations in temperature.

But it's more complicated than that, and you need to educate yourself before you get a contractor in to do the job.

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The most important thing about finishing your basement is to make sure to insulate the space properly, or you are just going to create the perfect environment for mould and mildew to thrive. Exposure to mould and mildew can lead to health problems - not the kind of thing you want your family exposed to.

Most people think insulation is important because it keeps the basement warm in winter, but it's even more important in the summer, when heat and humidity can cause a lot of moisture to build up.

Because basements are mostly underground, they have a unique situation with regard to air temperature. At the level of the basement floor - many feet below grade - the temperature remains fairly constant, just like the soil outside your foundation walls.

But, as you go up toward the ceiling, the temperature will rise. The air temperature near the ceiling of your basement is always higher than at floor level.

So, what's the big deal with that?

The big deal is, once you've finished your basement (if you haven't insulated properly), warm air from inside your nice new drywall will come into contact with the foundation walls behind the insulation. Warm air holds moisture, and this moisture will condensate when the air cools as it comes into contact with the cold exterior wall. This moisture will collect in your insulation, in your wood framing, and even pool at floor level behind your finished walls. Mould spores - which are everywhere - will flourish.

And, no matter what, if you insulate your basement the same way you do an above-grade wall - using wood studs against the wall, with batt insulation in between and vapour barrier over that - you will have air movement and problems with condensation, and very likely, with mould.

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I recommend you use rigid foam insulation against all the outside walls and the floor - two inches thick on the walls and one inch thick on the floor. This foam comes ship-lapped, so each piece fits snugly against the next with no gaps.

Be sure to glue the foam to your walls and floor with an adhesive that is rated for use on foam, otherwise it will ruin your insulation. Each seam should be tuck-taped, and spray foam used to fill any gaps around the edges.

Then, install studs over the top of the foam layer and finish your basement. I'd recommend using mould-resistant drywall as well. (All rigid foam insulation is mould and mildew resistant and won't hold moisture, even if you have a flood in your basement.)

What this will do is create a thermal break between the air inside your basement and the air outside. It will eliminate any air movement behind the walls that could lead to condensation.

Think of it like a beer cooler - they are made of rigid foam insulation. It might be a hot sunny day at the beach, but inside, your beer stays cold and the ice doesn't melt. And there's no dripping condensation on the outside of your cooler either. That's what the thermal break does.

It's the same as for newer toilet tanks - they all come lined with rigid foam to stop the annoying drip of condensation you used to get on old toilet tanks, caused by the cold water inside the tank meeting the warm air of the bathroom.

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It makes sense to finish your basement and take advantage of that extra living space - for a family room, media room or playroom for the kids. But make sure you insulate the space properly, or you are just going to create the perfect environment for mould and mildew to thrive.

Mike Holmes is the host of Holmes on Homes on HGTV. E-mail Mike at or go to .

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