The decision to renovate or buy a new home requires research, an assessment of your own personal financial circumstances and, ultimately, a few hard choices.
There is no right or wrong to either option. Both come with significant benefits as well as a few downsides. The key influencing factors should be your lifestyle aspirations, personal wealth ambitions over a five or 10-year period, and current financial capacity.
To start, as your local agent, we’d be happy to provide an appraisal to help you find out what your current home is worth. You should also visit some open for inspections of properties in your area so you can get a feel for what’s on offer in properties that are the next step up from yours and their price points. Some online research in this regard can also be hugely helpful.
These two insights will give you some baseline numbers that will help you calculate your options and weigh up the pros and cons.
A renovation will increase the value of your existing property but may not yield the long-term financial benefits of moving up to a more expensive home. On the other hand, every dollar you spend will add value to your biggest asset if you renovate tastefully and don’t indulge too many personal whims. Sometimes, the ambitions of a renovation become so large it is cheaper to move or knockdown and rebuild so make sure you consider this option in your calculations.
Downsides
- Do you really have the money? Few renovations are delivered on budget. There’s scope-creep as you change your mind and finesse what you really want, plus the possibility of unforeseen problems that can cost big time.
- Be careful not to over-capitalise on your property. Ask yourself what your home will sell for once all these changes are made – is there a profit in it for you? If not, then buying up is probably a better way to go.
- Builders also bring dust and chaos which is both stressful to live through and may create health issues.
- For a major renovation, you should consider moving out and renting. You’ll need to add this to your budget and allow for contingencies if there are building delays.
Upside
- If you love your location, a renovation can significantly improve your lifestyle in your current home. While construction work is not cheap, if you have paid down your mortgage, you may be able to use the equity in your current loan to pay for it. That avoids refinancing or, in a worst-case scenario, a bridging loan.
- A renovation will also reduce some of the disruptions of the move on the family with no changes to schooling for the kids and domestic chores such as shopping.
- Done well, a renovation will capitalise on the value of your property meaning it is worth more when you do decide to sell.
Still unsure? Make time now to receive a free property appraisal and understand what your current home is worth.