With the summer holidays looming, now could be a good time to revisit your renovation plans and get the wheels in motion to make them a reality.
While renovating is a great way to make lifestyle improvements, it often comes at a significant cost. If you’re considering renovating your home in the near future it’s a good idea to conduct some research into the costs involved.
Whether you intend to make smaller cosmetic renovations or larger structural renovations, unexpected costs are always a possibility. Before jumping on the home renovation bandwagon, Mortgage Choice recommends you:
Add up all the costs: Do your homework so you know what costs you are up for from the beginning. Be realistic about what you can achieve with the budget you set yourself, and be sure to stick with it.
Invest in a plan early: Keep in mind that the longer your renovation takes, the more money you will likely spend or even lose. Proper planning could save you some unnecessary costs down the track and make for a smoother renovation.
Avoid over capitalising: Investigate whether you can achieve your renovation without over capitalising on the investment, that is when the cost of the project outweighs the value it will add to your property.
Once you’ve added up all the costs and settled on a renovation plan, it’s important to turn your attention to how you will fund the project. Depending on the scale of changes, there may be a number of different finance options to consider such as a loan top up, personal loan, line of credit loan or even a construction loan.
According to Peter Machell, franchisee of Mortgage Choice in Bendigo, there are different types of loans that can suit both homeowners who prefer to be "hands on" (owner builder and DIY) and "hands off" (formal building contract and structured finance process). To help make the right finance decisions when renovating to create your dream home, seeking specialist help is a sensible idea. A good first step is to talk to a local mortgage broker, who will be able to clarify your property goals and help you assess the nuts and bolts of the finance options most closely aligned with your needs and circumstances. This may also be a good opportunity to shop around and compare your loan to the hundreds of others to see if there is one offering a better, well suited option.
If you have had your loan for a number of years it may be possible that a new loan structure will result in savings meaning the new repayments may be very similar to your current repayments – even with any extra borrowings you may have taken out to cover the cost of your renovations – and you may be able to get a better deal on interest rates and fees.