Renovate: how to decide if renovating is best for your situation
Here are a few factors that might help you decide to stay in your current house and give it a makeover.
The upsides of renovating your current home
Ask a seasoned renovator and they’ll tell you why they love to do it... Seeing the hard work of a renovation pay off can be a really rewarding experience. Here are some reasons why renovating might be right for you.
You could significantly increase the value of your home
If you choose to renovate, there’s one major drawcard that appeals to most homeowners: the potential to add value to your home. Whether you’re looking at taking on major upgrades (like a new kitchen or an outdoor entertaining area) or considering smaller DIY tweaks (like a fresh coat of paint or new carpet), these changes have the potential to increase your property’s value.
If you have the funds available and can commit to a reno – this could really pay off in the end. Major renovations like adding a bedroom or garage can add significant value to your property, especially in locations where space comes at a premium.
You don’t have to change location
Ever wondered why some people choose to buy the ‘worst’ house in the ‘best’ street? It has everything to do with location. Renovating is a great option for you if your property is in a sought-after location where the land value is high. It’s a strategic move that could pay big dividends if you get it right.
If your current location works for your needs, but your home could do with some upgrades, renovating might be the solution. You might have children enrolled in a local school, or work is a short commute. You might even be part of a community garden you love, or your family lives around the corner. In these cases, it may be smarter to renovate your current home to suit your needs.
What makes a house a home? Memories. You’ve bought your first property, and you love it. You’ve celebrated plenty of milestones in your home, but it’s no longer suiting your needs. Renovating your space to better suit your lifestyle means you don’t have to sell up and leave the house you’ve spent your time getting to know and love.
Using equity to fund the build
If you've been paying off your home loan for a few years, you may have built up some equity that could be leveraged to upgrade your home. Equity is the difference between your property’s current market value and the amount remaining on your mortgage. You can work out roughly how much useable equity you might have available with our equity calculator. Many homeowners tap into their usable equity to help pay for their renovations, by applying for a home loan top up.
The considerations of renovating your current home
There are plenty of reasons why renovating your home could be the way to go, however it's worthwhile thinking of the tricky parts of the job before making any key decisions.
Weigh up the costs
For most people, your budget will be one of the main deciding factors between renovating or moving.
If you need to find an alternative living situation while your home is being renovated, you’ll need to figure out if you can afford to rent elsewhere during that time. Other not-so obvious renovation costs to watch out for include:
- Demolition work and skip bin hire
- Inspection reports
- Building surveyor fees
- Asbestos removal
- Accessing building reports
- Furniture storage
If you find that renovating is the more affordable option, that could be the deciding factor in whether you choose to stay or move.
Council restrictions may apply
Sometimes councils might restrict development application (DA) plans to add another level to your property or make other significant changes to the footprint of a home. This might leave you with fewer options when it comes to maximising space in your existing property.
If a home is heritage listed, it means it has an environmental or cultural significance and needs preservation according to specific regulations. While you can renovate a heritage listed property sympathetically, you'll need to run changes past council and work with a heritage builder, architect or consultant. Heritage renovations may also cost more, due to the nature of work and skill involved.
Things take time and can get delayed
The reality of a renovation is that they sometimes involve changing timelines and delays that are often out of your hands. Delays can have a knock-on effect on the whole project. Being aware and building extra time into your project timeline can be helpful. Some people say the best skill to have during a renovation is flexibility. If a tight deadline is part of your plan, renovating might prove to be a bit stressful.
Budgets can blow out
When it comes to renovating, chances are you will run into some kind of speed bump during the project. Unexpected issues might pop up (think plumbing, electricity or structural problems) and can be costly to fix – especially if you haven’t left room in your budget. Most renovation experts recommend a 10-20% buffer for any emergency expenses that might arise.
The risk of overcapitalising is a real issue to consider when renovating a property. Overcapitalising is where more money is spent on renovating a property than the value that it adds to the property. Meaning that the money spent on renovations can’t be recouped when the property is sold. It's common to want the very best appliances and finishes, but you want to avoid going over budget for the sake of luxury without considering the future value.
Renovating can be a stressful and time consuming
Renovating can be incredibly rewarding – but it can also be pretty stressful. Juggling the responsibility of a major renovation while managing work and family can take up your time and focus, especially when you need to factor in research, decision-making, budgeting and managing tradespeople. Renovating isn't for everyone, and it's best to figure that out before you start work.
Moving: how to decide if moving is right for you
In some cases, renovating may not work for your needs and moving to a new property might be the right choice for you.
The upsides of moving to your next home
Let’s say you've enjoyed apartment living for a number of years, but now it's time to think about moving to a bigger home that better suits your needs. Moving to a larger property means you will have more control over what you can do with it, like adding extras like a garage or shed. You might also have more freedom to expand the existing footprint of your home, which might not be a possibility in your current place.
You want more space or a new location
Have you been dreaming of a sea change or tree change? Or maybe you don't have enough outdoor space for your growing family. If your existing home doesn’t tick the boxes in terms of location and total land size, then undertaking major building work won’t be a worthwhile investment for you. On the other hand, moving to a new area or upgrading to a more spacious block might be the right way to go.
You want a turn-key solution
Some people don't have the time or patience for a renovation – and moving straight into the perfect home that requires no additional work might sound like an appealing option. A renovation generally takes more time and requires more effort – but moving could be more expensive once you factor in the purchase of the new home and the costs that come with it. You’ll need to weigh up what’s more important to you.
You think you can make a considerable profit by selling your current home
If you've recently had your home valued, you might be pleasantly surprised to find out that it's significantly increased in value. This might be enough for you to consider selling up and moving. In some cases, you might be able to purchase a similar property in a new location you like, while still having money left over for other things - like other investments, a new family car or a trip overseas.
The considerations of moving to your next home
There are plenty of reasons why you might want to move, and it's important to consider the tricky parts of the task too.
Costs to be mindful of
Moving house can be expensive – so it’s worth looking at all the potential costs that come with selling your home – on top of the actual cost of the new property, of course. There are some costs that might not come to mind straight away, like:
- Stamp duty
- Real estate agent fees and marketing costs
- Moving costs and removalists
- Solicitor/conveyancer fees
- Rates and taxes post-settlement
- Home staging/styling
These costs add up - and could be a key factor in your decision.
Is it a good time to sell (and buy)?
Figuring out when and if it’s a good time to sell depends on a few factors. You’ll need to have a decent understanding of your local market, as well as an understanding of what your specific needs are for your sale. If local trends in your area are showing that it’s a seller’s market with plenty of demand, then it could be a good time to consider selling. Of course, it's important to remember that if you’re selling your home in a seller’s market then you will also be looking to buy in that same competitive market.
Deciding which one is right for you
The decision to renovate or move into a new house is an important one, but it doesn’t need to be overwhelming. There are pros and cons for both scenarios; renovating can be more cost effective, and you could leverage your home equity to help finance. However, renovating can also be time consuming and stressful. Moving can be a great way to get to your dream home straight away, but depending on the market, it might not be feasible within your budget.
Good news – you don’t have to decide on your own. We're here to help. Call us on 131 900 or visit a branch to chat to your local Home Finance Manager about your options.