Is it Better to Renovate or Upsize?
Eventually, every homeowner reaches a point when the thought of giving their existing home a renovation makeover or upsizing to a bigger place crosses their mind.
It’s a difficult choice to make as you have to weigh up the pros and cons of both, your current circumstances and your future needs. As you begin to do your research and visit multiple online forums for advice, you soon realise that the options, costs and benefits can spin out of control.
Understanding your purpose and what you want to achieve, knowing the costs and work involved with each option can help make the decision much easier. Start by weighing up all your options.
Decide on the type of home you need.
Renovating is a great way to add value to your home and make it your own. You may have bought your home as a couple but now have a growing family, and need more room. Maybe your property is an older style home and in need of a modern open-plan update. First decide what you want – the amount of space, the style and layout that’s important to you or the location. Then you need to decide on the ideal location. If you love the street and current neighbourhood you live in and have the space to extend, then renovation is probably the first option you would consider.
Plan the changes you would like to make.
Once you know what you want to fix, then you can start planning the solution. Luckily there are some professionals that you can consult with to assist in getting this right. Setting aside some time to research and money to consult with professionals for design advice and costings will save you a lot later. The last thing you want is costs that go through the roof due to unexpected delays or complications. Getting an itemised cost for your vision, from builders, electricians and architects for examples can help you nut down the exact budget you will need.
Cap how much you will spend on renovations.
It is important to ensure that you are not over-capitalising on any renovations you’re planning. In simple terms, when the cost of your home improvements is more than the value it adds to your property, you’ve overcapitalised. That’s where your local real estate agent can be helpful in giving you a clear idea of the property prices in your neighbourhood.
For example, if you buy a property for $750,000 and spend $50,000 on home renovations, it’s not a given that it’s going to increase your property selling price to $800,000, or more. If properties similar to yours are selling for $775,000, your investment in renovations is unlikely to increase the selling price substantially.
Renovate or upsize, the final deciding factor.
Reach out to your real estate agent and find out how much your home is worth as is. Then scope out the entire renovation project, from labour and materials to rent (if you have to move temporarily while the work is underway). Add the two together.
That’s the price of a home that you could upsize to instead of renovating your current place. Of course, you will also need to take into account other home-buying and selling costs like stamp duty and agent’s service charges.
Then do your research, requesting a free property report of your local area, or your agent may be able to provide this information. With this clear picture before you, you can then make the ultimate decision of whether a renovation is necessary or if you would be better off purchasing another home.
You have to base your final decision on what is most appropriate for your situation and will get you to where you want to be.
At Mortgage House, we’re no strangers to the homeowner’s journey. It’s a long (but rewarding) one.
But don’t worry, we can help with that.
If you’re thinking of buying a home or looking for a loan top-up to fund your home renovations, you can contact us for information about the best options for you when it comes to your mortgage.