With property prices rising across most markets and interest rates hovering at all-time lows, many Australians are left questioning whether now is the best time to sell and upgrade into a bigger home, or renovate their existing abode.
While upgrading into a bigger and better home is (quite often) a simpler and more efficient solution – it is not always the most cost effective option.
Before making any major financial decisions, it is important to weigh up the benefits of both options and determine which choice might be right for you and your financial situation.
A few key factors to consider when deciding between upgrading and renovating your home include:
The condition of your current home
The condition of your current home is an important factor to consider when deciding if you should renovate or upgrade. Can your home withstand renovations or is it too old for the task? Does your current home boast the right structure and land space needed to complete your dream renovations, or would you be limited in what you can and cannot do to the space? Further, does your local council have any concerns about potential renovations or are you free to do as you please? For example, some homes will be classified as ‘heritage listed' or by their local councils, which means home owners are often not allowed to change the home's front facing façade.
Cost of Renovations
With interest rates sitting at all-time lows, many home owners believe they may be better off simply refinancing their current mortgage and taking on additional debt to complete their renovations, rather than spending the big bucks on buying a new home. While this could be the case in some instances, before you make any decisions, it is important to understand exactly what renovations you want to make and how much it may cost you to do so. It is also important to factor some fat into any ‘renovation budget' you have, as costs will often blow out during the renovation process.
Assessing your current and future needs
Assessing your current and future needs both financially and physically is crucial in determining which option is best for you. Often when choosing to upgrade, it helps to consider how long you intend to stay in your home and whether the possibility of downsizing will arise sooner rather than later. Also, it pays to look at how long any renovations may take and what impost they would/could have on your living arrangements?
By knowing what you want, how much money you have to spend, and what your future property goals are, you can make the right decision when it comes to upgrading vs renovating.
Contact your local Mortgage Choice broker today to see which option is right for you.