Should you sign up for a home loan for a new home or renovate?

Entering the property market is a thrilling prospect, but it’s not just finding the appropriate home loan that’s important — choosing what to buy also warrants careful thought!

Housing trends in Australia

Overall dwelling approvals dropped 11 percent in September, seasonally adjusted, according to the Australian Bureau of Statistics (ABS). According to the Housing Industry Association (HIA), this marks a 13-month low.

“[The] figures provide further evidence that the national recovery in new home building is likely to have passed its peak. Monthly approvals reached over 17,000 earlier in the year. During September, we barely hit 15,000,” explained HIA senior economist Shane Garrett.

The dip in dwelling approvals may impact the availability of new homes over coming months. As an alternative, is renovating a do-upper on the cards?

Is renovating the way to go?

If you’re a fan of reality show The Block, then renovating may jump out as a great idea.

The great thing about renovating is the ability to inject your personality into your home. Do you want an airy, open-plan living room and dining area with a bold feature wall? Or perhaps a master bedroom with a window alcove for reading and a generous walk-in wardrobe speaks to you.

Plus, you may be able to secure a property in a great suburb for a steal. If you’re focussed on a particular location, this may be a good way to get a foot in on a trendy neighbourhood.

There are downfalls to renovating, though.

If you buy a property that’s in dire need of a significant makeover, you may have tradies hanging around for quite some time. If you’re at work or socialising with your other half a lot, this may not be an issue. But if you’ve got young kids or enjoy chilling out at home during evenings and weekends, then you may find this quite disruptive. You may even need to fork out for alternative accommodation in the meanwhile, which could put a real dent in your savings account.

Secondly, there are some renovations you can complete yourself. But when it comes to electrical wiring, plumbing and substantial building work, you’re relying on — and paying — others. So it’s essential to budget very carefully and put deadlines in place.

Is a new home for you?

Perhaps a new home is more your cup of tea.

After all, you can simply move in and enjoy your property, with its shiny new interiors!

Many new properties will be sustainably built, with sound insulation and so forth. So if you’re after a property that will be warm and dry rather than cold and damp, a new home could be worth considering.

Make sure you consider the financial and legal aspects carefully. For instance, if you’re buying an off-the-plan property, have you checked whether the contract of sale includes a sunset clause? If the property isn’t constructed by a stipulated date, the purchaser or vendor can cancel the contract. If the vendor cancels, you’ll get your deposit back — but you’ll also be without a home!

Alternatively, you may work with a building company and take out a construction home loan — you’ll draw down funds from your lender in parallel with the various building stages.

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