No doubt you were really excited when you first bought your house. It was probably the right choice for you, at that point in your life. But fast forward a few years and you may be finding that your current home is no longer ideal. Maybe your family has gotten bigger. Perhaps you’ve changed jobs and you no longer live close to work. Or it could just be that you’ve started to dream of living somewhere a little newer, a little eco-friendlier, or a little more suitable for working from home.
At this point, you have a decision to make: is now a good time to buy a house – should I move or renovate? The answer will depend in large part on your motivations, the needs of your family, your budget, and how much equity you have built up in your current home.
Should I Move?
If your main issue with your current home is the location (not close enough to schools, too far to travel for work, etc.) then it makes more sense to move somewhere new. Researching where you would like to move and what property prices are like in that area.
While moving may sound like a simple solution, there are several factors that you’ll need to consider. These include:
Funding the purchase:
Are you going to sell your current home and then use those funds to buy your new home? If not, will you need bridging finance (to cover the cost of your new home until after your existing property sells)? Can you access the equity in your current home to use as a deposit for your next home? If not, and you have less than 20% of the purchase price saved as a deposit, will you need to pay for Lender’s Mortgage Insurance? These can be tricky questions to sort through, so it’s a good idea to talk to a mortgage broker before deciding on a definite course of action.
Paying stamp duty:
When you buy property in Queensland, you’re required to pay stamp duty on the purchase. The amount of stamp duty you’ll need to pay will depend on how much the property costs and whether you qualify for a concession.
Associated purchase costs:
When you’re planning to buy a new home you’ll also need to factor in a range of associated costs. These include conveyancing fees, title insurance, and registration costs, pre-purchase inspections, real estate fees (typically a commission of 1-3% of the sale price, plus advertising costs) and the expenses associated with moving (if you plan to hire a truck or use a removalist service).
Should I Renovate?
If you love where you live but not the house you live in, then renovating may be the way to go. This could involve a simple extension (perhaps just adding another room), an overhaul of the existing property (updating key areas like the kitchen or bathroom), or even a total knock-down re-build.
Once you’ve decided on the extent of your renovation, you’ll also need to think about:
Financing the renovation:
If you’ve built up sufficient equity in your existing home, then you may be able to refinance your existing home loan to fund your renovation. Alternatively, you could take out a construction loan to cover the proposed renovation works. To determine which option is best, make an appointment to speak with a local broker.
Managing the renovation:
Project managing a renovation takes a lot of time and effort, so you’ll need to decide if this is something you can handle yourself or whether you’re better off paying a builder to manage the renovation for you.
Associated renovation costs:
In addition to paying your builder for labor and materials, you’ll also need to budget in associated costs. This could include council fees, building permits, and a project insurance policy. It’s also wise to allow a buffer in your budget (usually 10% of the total cost) to allow for any unexpected expenses that could crop up once the work is underway.
Regardless of whether you plan to move or renovate, a home upgrade is a big decision. For expert advice from someone you can trust, contact Phil and the team at Professional Lending Solutions.