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How To Decide Between Renovating and Buying a New Home
Do you love your neighbourhood, but need more space for your growing family? Or maybe you want a home that’s more modern and energy efficient?
You may be asking yourself if it’s worth the cost of fixing up the house you live in now, or whether you’d be better off buying a new one.
To help you decide which option might be right for you, here’s a look at some of the pros and cons.
Renovating your home
Home improvements offer you an opportunity to get the property you live in now exactly the way you want it. That means you’ll be in charge of everything, right down to the kitchen sink.
Other advantages of renovating include:
- May be cheaper. On a per-square-metre basis, it can often be cheaper to add additional space to your existing home than to purchase the equivalent amount of space in a new dwelling.
- Can use your equity. If you have equity built up in your home, you may be able to access money for renovations with a home equity loan. However, you’ll still need to qualify for the loan and pay any closing costs.
- You can stay put. Do you love where you live? For home owners with a strong emotional connection to their homes, renovating may be the right choice.
On the other hand, having major renovations done is no picnic. Here are some things to consider before taking the plunge:
- Can get complicated. Renovations can be time-consuming, messy and disruptive. You may even need to temporarily relocate while the work is in progress. Between material shortages, contractor delays and budget overruns, renovations don’t always go as planned.
- Don’t overcapitalise. Is your home worth spending money on? Extensive renovations usually only make sense if you plan on staying for a while, or if they have the potential to significantly increase the value of your home
- May need council approval. Even minor home alterations may require planning consent from your local council, so make sure you get the go-ahead before starting work.
Buying a new home
There are several potential benefits to starting from scratch with a new home, including:
- It’s a known quantity. When buying a home, you know exactly what the final product looks like, and you can move in and start enjoying it right away.
- A chance to declutter. Do you really need all those old magazines and plastic containers without lids? Moving gives you a chance to go through your belongings and chuck out anything you don’t need or love. It can be a very liberating experience!
- A fresh start. For some people, a change is as good as a holiday. Buying a new home means you’ll get to meet new neighbours, switch up your routine, and explore new cafes and walks.
Just remember to weigh up the advantages against the potential drawbacks of relocating, such as:
- Hefty costs. Moving house is expensive. You’ll need to factor in selling costs, real estate commissions, new loan application fees, closing costs and moving expenses. Also, if you settle on your new property before the sale of your old one, you might need to take out an expensive bridging loan to tide you over until the money comes through.
- Financing. If you can’t transfer over your current home loan, you may need to apply for a new one and pay it out through that. While this means you may have to go through the application process all over again, it can present a perfect opportunity to refinance your home loan and find a more competitive rate.
- The inconvenience. Between packing and unpacking everything in your home, moving house is a lot of work.
If you’re still on the fence, make a checklist of everything that you want and need in a home. If your current home would come up short even after renovations, it may be time to upgrade to something different.
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