There comes a time when your home just doesn’t do the job anymore. Perhaps you’ve had more kids, or your kids have grown and moved on. Maybe you need a space to work from home or you’re just at your wits end with that tiny kitchen space you’ve been expertly manoeuvring for the past ten years. You have some capital in your property, perhaps some savings, and it’s time to fix your living situation. The big question is, do you fix up what you’ve got, or do you take the opportunity to move into something brand new?
Your first consideration is your budget.
The amount of money that you would net selling your property and the amount of money you could borrow through a refinance will not be the same. When you redraw or refinance in order to borrow money for renovations you probably won’t be able to borrow more than 80% of the value of your home (Keeping in mind that renovations may actually improve the value of your property to improve your borrowing or selling power). However, if you sell to retain all the profits towards a new home, then don’t forget to factor in all the additional costs such as:
- agent costs
- any break fees for the mortgage
- legal fees
- moving costs
- possibly essential repairs that may needed in your new home.
- Any break fees for changing or setting up new amenities suppliers
While working out the exact amounts is a bit of a guesswork, depending on your situation you may find that one option is simply untenable. Alternatively you may find that renovation is the most cost effective for an immediate solution, while paving the way towards moving a little further down the track.
If both options are possible, then move on to consider the other factors at play.
Is the house you are currently in within the perfect location for you? Close to work, school, friends, family? Perhaps the appeal of moving is related to finding a location that is more suitable for your current life. Closer to the bustling city, or further away towards the peace and quiet. Moving is your chance to get into a better location, but it could also be a time to sacrifice the convenience of a great location for other benefits.
Whether you choose to move or renovate your existing home, effort is required. If you’re doing renovations yourself, it can be a long, hard road to completion, depending on your level of skills and the amount of time you have to devote to the project. On the other hand, moving also requires effort as you pack up the house, and set up a new one. Of course there is the option to hire people to do renovations for you. There is also the option to hire removalists to pack and partially unpack for you. Neither option will completely eliminate the effort, but they will help reduce it. Figure out how much you would need to put in, and what you can realistically do for each option.
Will your home be able to do the job you want it to do with a bit of renovation? If you really need three extra rooms but you don’t have the space to add these in, then renovating is a pointless endeavour. If your property is simply too big for the now empty nest, renovations won’t really change that. Unless you’re turning part of your house into an BnB to bring in some extra cash… How practical is it to turn your current home into the home you are needing compared to finding a completely new home that is more suitable?
PEACE OF MIND
At the end of the day you also have to factor in the emotional. There can be a sentimental attachment to your home, strong enough to be a decisive factor in whether to stay or move on. For others peace of mind may come from setting up in a fresh new location, away from the bustle of the old. While you shouldn’t let emotions solely rule your decision, it is important to factor them in.
MAKE YOUR CHOICE
Ultimately no one can make your choice for you. Weigh up each factor to consider what is actually attainable and what will benefit your family the most. Think short and long term, so that you’re not stuck making a decision that is completely unsuitable for your immediate or longer term needs. After all, renovating and moving are both major decisions that require a lot of time and money to get right.