Getting a Home Loan in Australia if you're living overs...
29 Nov 2023
Have you been considering doing a home renovation but still hesitating?
If you’re thinking about taking on a renovation project, there are a few key things to consider before deciding if it’s going to be worth it for you. To provide you with some guidance, here are some of the pros and cons of renovating your home that you might want to weigh up before you get started.
Firstly, let’s get the good stuff out of the way. There are many benefits to renovating your home, so let’s discuss a few of them.
One of the main reasons many people decide to renovate is because of the added value it creates. If done right, renovating can be a great way to increase your property value, which means more money in your back pocket when it comes time to sell. To give you a hint of what you might look at updating, kitchens and bathrooms are the most common renovation destinations.
Maybe you’re sick of the bathroom tap always leaking, or you hate the tacky carpet in your current home. Rather than moving into a property without these issues, often times, renovating ends up being better for the budget when accounting for all the costs of buying a home and selling. Plus, if you’re in a location that you love, why move?
When you renovate, you can make custom changes that cater to your likes/preferences. For example, do you love the look of a feature wall? You can pick any colour and put it wherever you want. If you love taking long showers, you could consider installing a cost-effective rainwater shower. Whatever you want to add to or change about your home, you can - the options are pretty much endless.
If you wanted to, you could choose to make additions to your home to account for a growing family or changing lifestyle. Whether you choose to add on an extra bedroom at the back of the house or knock down a wall to create more space, that’s totally up to you.
At the end of the day, renovating your home allows you to make improvements that will benefit your everyday life. Whether that’s putting solar panels on the roof to save on energy bills, or putting in a new kitchen stove that isn’t from the 1970s - you can create a more modern, sleek home without needing to move elsewhere.
As well as benefits to a home renovation, there are also drawbacks that should be considered before drawing up designs and knocking down walls.
There are significant costs to renovating and one of the most common mistakes when renovating is what’s called overcapitalising. As mentioned earlier, renovating can add value to your home when done right. If this isn’t considered, you might end up spending money on a renovation that doesn’t reflect in the value of your home.
For example, if you spent $50,000 on a new kitchen, but it only adds value of $20,000 - you have overcapitalised.
If you overcapitalise, you’re essentially losing money. Additionally, if you make specific renovations for you and your lifestyle, this might not be attractive to buyers. For example, if you painted a bright green feature wall, this might end up turning off potential buyers, or be seen as something that needs to be fixed.
If you’re making massive structural changes to your home that make it unlivable for a period of time, you might need to rent elsewhere as the renovations are being completed. This can be costly, as not only will you need to keep up with your mortgage and finance your renovation project, you also need to cover your rent.
Whether you’re looking to expand or to make specific alterations, a renovation project can be highly rewarding.
However, depending on what you want to get out of it, you should weigh up the pros and cons of renovating before deciding if it’s worth it.
Renovating a home is not an easy task - it takes time, patience, money, and precise planning. You might also need to consider taking out a construction loan to finance your renovation project, depending on its scale.
Talk to one of our friendly lending specialists today.
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