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Tips for renovating your home this new year

Tips for renovating your home this new year

Taking some time off over the Christmas and new year holidays? Maybe you could use this time to actually follow through on those plans you’ve had for ages to renovate or fix up your home. Whether you’re looking to increase your property’s value, or improve your own quality of life, here are a few general tips to consider when you’re looking into renovating.

Fix existing problems before making new changes

While you may be keen on renovating to make some big sweeping changes to your property, pre-existing problems such as leaks, rising damp, or termites could risk undoing all of your hard work.

Consider checking for any problems with your property’s electricity, plumbing, or structure, and fixing these underlying issues first before you move on to the fun stuff.

Little changes can make a big difference

Whether you’re fixing up your property to improve your standard of living, or if you’re renovating the place to sell or rent out as an investment, you don’t always have to spend a lot to see a big difference.

Something as simple as a lick of fresh paint can freshen up a tired looking property, inside and out. Other small adjustments could be to update the home’s fittings, from taps to lights and even light switches. You could also look into sprucing up the garden, or replacing old built-in appliances with new models.

Some small jobs you may be able to do yourself, while others may be best handled by a professional tradie, such as a plumber or electrician.

Try to avoid overcapitalising

They say you have to spend money to make money, but this advice has its limits if you’re renovating to sell. Putting too much money (capital) into a property could put you at risk of having nothing to show for it come auction day. For example, you could spend $200,000 on renovations that only add $100,000 to the property’s value, effectively leaving you out of pocket.

Do your research into what kind of renovations potential buyers are likely to want to see, and consider whether an improvement is realistically likely to offer value before you take the plunge. Comparing the value of your property to the recent sale prices of similarly-renovated properties in the area could give you a benchmark for setting your renovation budget.

Get the right type of finance for the job

If you don’t have fat stacks of cash available in your savings account for a rainy day, you may want to consider different finance options to help fund your renovation project. Your best option may depend on the reno work you’re planning, as well as your own financial situation.

  • If you have a set renovation budget in mind, you could consider a personal loan. This could let you borrow the money you need as a lump sum, to be repaid with interest over a set term. You may not be able to easily borrow extra money, but this could actually help to prevent your reno budget from blowing out.
  • If you’ve been making extra repayments onto your home loan, your lender may offer the option to redraw this extra money to cover your reno costs, Of course, this would mean you’d no longer be ahead on your home loan, which could affect the interest you’ll pay in the long term.
  • If you have equity available in your home loan, you may be able to refinance your mortgage to borrow the extra money you need as a lump sum, though this would mean paying interest on your reno budget for the rest of your loan term. If you’re unsure what your reno budget may be, you may be able to opt for a mortgage that offers a flexible line of credit, which works a lot like a credit card with a limit based on the equity in your property.
  • If your renovation plans are ambitious enough to be considered a building project, you may be in the market for a construction loan. These specialised mortgages don’t pay you a lump sum when you apply, but allow you to draw down money in stages as the project progresses, and only pay interest on what you’ve drawn down so far. Construction loans can be complex, requiring multiple property valuations over the course of the building project, so make sure you’re familiar with the lender’s requirements before you apply.  

Get professional help

While you can often Do It Yourself for smaller jobs around the house, major renovations typically require specialist skills. Get quotes from professional builders and tradies, and consider contacting architects or interior designers for more complex projects. Construction loans may require the work to be carried out by licensed and insured builders, rather than as an owner-builder.

Similarly, when it comes to sorting out your reno finance, you may want to consult a mortgage broker or financial adviser to work out what options may be right for your situation. They may be able to find out if you’re eligible for any extra support or incentives, such as the government’s HomeBuilder grant. Plus, a broker can help manage your finance application, minimising any paperwork-related headaches so you can concentrate on your project.

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This article was reviewed by Personal Finance Editor Alex Ritchie before it was published as part of RateCity's Fact Check process.

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