To Renovate or Move?

 

To Renovate or Move?

 

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It would seem that Australians’ addiction to DIY Television shows is being felt closer to home than ever, with last financial year (2015/2016) seeing a record $7.7 billion spent on home renovations according to the latest ABS figures. This trend is set to continue with the falling interest rates making it even more affordable for property owners to undertake home renovations.

Whilst renovations can potentially increase the value of a property, Mortgage Choice’s recent survey results show that the purpose for most Australian homeowners is to improve their lifestyle by customising their home to suit them, this could mean putting that dream pool in the backyard before summer, or re-doing your entertainment area just in-time to host Christmas at your place. Are you missing out on the lifestyle YOU want? Keep reading!

If you are thinking of renovating but not sure where to start or how to get the ball rolling a good first step is to talk to a local mortgage broker, like Irene Cujko to clarify your property goals and help you assess the nuts and bolts of the finance options that most suit your needs and circumstances.

When first looking at how much homeowners were intending to spend on their renovation plans, the Survey found 72% had budgeted between $0 and $20,000 and 28% had budgeted between $20,000 to $70,000 to create their ideal home.

There are many different financing options available, but finding the right solution for your needs and circumstances, now AND in the future, that is the key.

Line of credit

A line of credit or home equity loan is a loan against the value of your property which can be used for renovations. One of the best things about a line of credit is that it gives you the freedom to spend the money as you wish – you can spend the loan in one hit or a little bit at a time. For this type of loan, interest is calculated on the outstanding balance of the loan, not the whole loan amount. It is important to note that the interest rate on this type of loan can be higher than the average mortgage rate.

Offset

Alternatively, you may be able to fund your renovations through your offset account. An offset account is an account that operates in conjunction with your home loan. The balance of your funds in your offset account is deducted from your outstanding home loan balance, reducing the interest you pay on your loan. So not only does your spare cash located in your offset account help you to reduce the amount of interest you need to pay on your home loan, but you can access the funds in your offset account at any time through ATMs, EFTPOS or online banking.

Redraw

If you are ahead on your mortgage repayments and you have a redraw facility associated with your home loan, you might be able to redraw from your current loan to finance your renovations. It is worth noting that there may be a fee attached to redrawing money from your loan, so make sure you do your due diligence and determine whether this is the right plan of attack for you and your needs before you dive in with both feet.

Refinancing

Another way you can fund your renovations is through refinancing. By refinancing your mortgage, you should be able to borrow more money which can then help you fund your renovations. And, with interest rates low and Australia’s lenders proving they are hungry for business at the moment, refinancing may be the right solution for your needs. Through refinancing, you may also find that you are not only able to fund your renovations, but reduce your current mortgage interest rate. At present, there are a lot of competitive rates available, especially in the fixed rate arena.

Construction loan

If your planned renovations are significant, it may be worth considering a construction or building loan. A construction loan works in a similar way to a home equity loan except that your lender will not release the full loan amount to you upfront, rather they will release it to you in stages as the renovation progresses.

Personal loan/credit card

On the flipside, if the renovations you have planned are quite minor, then you may find it easier to take out a personal loan or use your credit card for the proposed refurbishments. Of course it is important to remember that the interest rates charged on credit cards and personal loans are higher than the average mortgage interest rate.

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"We were a bit hesitant to refinance our home loan, but mortgage choice made it so simple and easy and worry free. Irene is very professional and knowledgeable in this field. We were very pleased to have met her and worked with her. We will recommend mortgage choice to all the people we know, because we know they will be as happy as we were with the decision we made.

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"We were a bit hesitant to refinance our home loan, but mortgage choice made it so simple and easy and worry free. Irene is very professional and knowledgeable in this field. We were very pleased to have met her and worked with her. We will recommend mortgage choice to all the people we know, because we know they will be as happy as we were with the decision we made.


Paul and Marlene, Refinancer

At the end of the day, it's important that you make the right life and financial choices for your future. Call us on 02 9674 8014 today to meet with our local broker Irene Cujko and see if we can help your renovation dreams come to life. It pays to talk to the professionals!

 

 

Talk to us today

Irene Cujko from Mortgage Choice Kings Langley
02 9674 8014

https://www.mortgagechoice.com.au/irene.cujko
https://www.facebook.com/MCinKingsLangley/

 

Posted in: Lifestyle

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