If you are planning to renovate your home in the near future you are not alone. More than 35% of Australian homeowners are planning to renovate their home within the next year according to Mortgage Choice’s 2016 Money Survey.
Andrew Perry of Mortgage Choice Manly, says that “Not only can renovating a home significantly improve its value, but it also allows homeowners to stay at their current address. Furthermore, with property prices continuing to rise across most capital cities year on year, many homeowners believe it is more cost effective to renovate their home rather than buy and move elsewhere.”
For those who are thinking of renovating their property, Mortgage Choice offers the following tips.
1. Set a budget
While it can be difficult to stick to a budget during the renovation process, it is still important to set one. Start with getting recommendations from family and friends for potential tradespeople you could use and narrow them down to at least 3 to get detailed quotes from. These quotes will give you a clear idea of how much the renovation will cost you.
To minimise any unexpected costs it pays to involve professionals like architects, building inspectors, electricians and plumbers to uncover any issues in your current home that might arise during the renovation process. It is important to assess all the elements before starting your project and to put aside sufficient contingency funds to cover unexpected expenses.
Find out what approvals you need from your local planning authority early on. Depending on the extent of the renovations you may need to lodge a formal development application which can take time and needs to be factored into your decision making process.
Decide on which professionals you will need to engage to work on your project. Good planning and investing in professional advice will pay off down the track.
3. Don’t overcapitalise
If you spend more money on your renovations than you are likely to recoup if you had to sell immediately means you have overcapitalised. Future proof the sale of your home by knowing your neighbourhood and the typical sale price of comparable houses in the area. What is a typical buyer in your area looking for? What are they prepared to pay? Consider spending money on renovating areas of your home that will appeal to the greatest number of potential future buyers. For example if your house is in a great catchment area of a school then renovating to create a family friendly home will increase the resale value of your home.
4. Work out your financing
Once you have sorted out your budget, you will need to work out how you plan to finance your renovations. Will you use the cash you have in your offset account? Will you redraw funds from your home loan? Will you need to refinance your home loan? A mortgage broker can help you work out the best way to fund your renovations.
5. Living with renovations
It is important to work out if you can handle living in your house whilst the renovations are underway. If you feel that living on a building site is not for you then you may have to consider renting and this will have a significant impact on your budget.
Expert advice at no cost to you
In order to cover the costs of a renovation, you may need to take out a loan (or extend your existing home loan) to meet the renovation costs. It's best to speak to your Mortgage Choice Lender early on to make sure you have the available funds. As your local Mortgage Choice home loan expert, I can give you access to a wide choice of lenders, including the major banks. Best of all, there is no charge to you for my home loan service because the lender pays me after your loan settles.
For more information about any aspect of the lending process, just ‘Ask Andrew’ by completing the contact form at the top right of this page or call on 9401 9244 or 0412 498 872.