Have you outgrown your home, but aren’t sure whether to move or stay?
If your house has served you fine for years, but now you or your growing family need a ton of new space, then you’re probably facing a dilemma whether to renovate your existing home or up stumps and move. It’s a complex decision, so deciding what to do depends on a number of factors including your financial situation and lifestyle.
There are a number of things to consider if you are thinking about renovating your current home rather than move to a different one.
Take a moment and ask yourself these questions before making a decision:
- Do you have a plan for how long you will be living in the area? For example, would you be considering moving interstate down the track or starting a family which would mean you may need to be closer to child care facilities and schools.
- Does your current area provide you with the necessities you will need in the future? (e.g. schools, shops, medical facilities, public transport)
- Are you prepared to live in a construction zone while the property is being renovated or do you have another option to avoid this?
- Will you be willing and able to supervise builders and contractors as well as the overall renovation or will you pay someone else to do the entire thing?
- How do you intend to fund the renovation? If you want to manage it yourself and doesn’t involve structural changes then you may be able to use your savings or equity. If you are relying on the improved value once completed it may be a construction loan so you can borrow against the completed value.
Challenges of renovating
This is one of the biggest problems renovators have when renovating a property. Overcapitalising is when the money you spend is more than the increase in value to the property, so you end up going to all the trouble to renovate and not getting a return on what you have spent when you sell. To avoid this get as much advice as you can. Use people like real estate agents to review what you are looking to do and provide a guide as to how much it may improve the value. Make sure they are conservative and base their estimates on recent sales not on projections.
Do extensive research yourself so you are not relying on one source. You can find out the details of other similar properties nearby and how much they are worth to give you an idea of what your property could be worth. The free Property Report on our website gives you recent sales data for other properties in your area to help you price your own.
Once you have decided on how much to spend, to avoid over capitalizing it is important to create a budget, stick to it and also be financially prepared for any surprises along the way. If you are doing the work yourself to save costs, then ensure you put in an adequate buffer to cover the unexpected.
Before going ahead with a builder or tradesperson, get several quotes and make sure you read the fine print so that you are not surprised with a price hike halfway through the construction. A fixed price contract that covers everything may help ensure the budget is adhered to.
Living with the disruption
You may be financially prepared to renovate your property, but are you prepared to live with the disruption?
Depending on the type of renovation, you may have to live with dust everywhere and materials sprawled out on the front lawn for months and months with builders walking in and out of your home everyday. You may decide that it is best if your family moves out during this time, but this may mean having to put up money for accommodation or moving in with family or friends.
After looking at what is involved with renovating your property, you may find that moving on may be a more suitable choice. It's possibly time to move in to a new home if you want: Better schools, parks and community facilities, a bigger garden or outdoor area, a quieter neighbourhood, renovations are not within your budget and/or the renovation may result in you overcapitalising.
Overall, choosing to renovate or move will completely depend on your own situation. You will need to look at your family’s lifestyle needs for now and the future to decide which will be the best option.
See if you qualify. To get a more accurate idea of how much you can borrow with State Custodians,