When it comes to making a decision about your home, you have two options: renovate or relocate. It's an age-old dilemma that every homeowner will face at least once in their life. Do you stay put and invest in remodeling your current property? Or do you take the plunge and buy a new house?
The answer is not always clear-cut. It depends on a few factors like budget, lifestyle preferences, and long term goals. In this article, we will explore the pros and cons of both renovation and moving so that you can make an informed decision for yourself!
How to decide to renovate or move?
One important factor to consider when deciding to renovate or relocate is the cost of each option. Revamping a house can be a big investment, especially if you are planning major renovations or adding more space to your house. It's essential to understand your renovation budget and determine if it is feasible given your financial circumstances.
Likewise, moving house can also be costly. There are costs associated with selling your current home, such as real estate agent fees and stamp duty, as well as the costs of purchasing a new property, including the deposit and any mortgage costs.
Be sure to consider these moving expenses in your decision-making before selling your current space to purchase a new home.
So, how do you decide whether to renovate or move? Here are five factors to consider when weighing up the options.
5 Factors to Consider When Deciding to Renovate or Move
1. Is your current home in a location that meets your needs?
Location is often a major factor in the decision to move or renovate. If the location doesn't suit the future needs of yourself and your children, it might be more practical to move to a new home in a more convenient area.
If you love your neighbourhood and have good schools, parks, amenities and friends nearby, it might be worth staying put and renovating to make your home more suitable for your family. Statistically, this is the biggest factor to why Australians upgrade their homes.
2. How much time and money do you have available?
Renovating your home can be a time-consuming and cost a sizable lump sum. Depending on the scope of the work, it could take months to complete. You'll also need to factor in the cost of living elsewhere while the work is being done, as well as design fees, engineering fees, consultant reports, and council fees. If you don't have time to oversee major building work, moving house might be a more practical option.
That said, the hidden costs associated with selling and purchasing a home in Australia can include real estate agent commission, marketing costs, broker's commission, stamp duty and cost of conveyancing. These moving costs can range from 7-11% of the value of a home, whereas an average kitchen renovation is around $16,900.
If you're willing to put in the time and effort, renovating can be a more cost-effective way to get the home you want, especially if you have the cash or enough equity in your current property to finance the changes. This is where Driva can help; with just a few clicks Driva will search thousands of lender policies to find the right renovation loan to suit your needs, with a competitive interest rate, monthly repayments, and a loan term that’s right for you.
3. How much value will your renovations add to your home?
Renovating will often increase the value of your existing property, especially if you are making improvements that are in high demand, such as a new kitchen or bathroom.
Although, it's important to be aware that not all renovations will increase the value of your home. It's possible that a beautiful bespoke home may fail to recoup the full cost of renovation if its not in an equally sought-after area.
4. How much do you enjoy renovating?
Renovating can be a rewarding experience, but it can also be stressful and time-consuming. If you're the kind of person who enjoys the process of designing and overseeing renovations, then it might be worth staying put and renovating your existing home. On the other hand, if you'd rather leave the renovations to someone else, moving to a new home might be a more appealing option.
5. Do you have the skills and experience to tackle the renovations yourself?
If you're considering a major renovation, you'll need to decide whether you're up to the task of tackling it yourself or whether you'll need to hire professionals. If you have the skills and experience to do the work yourself, you could save money on labour costs. However, if you're not comfortable taking on the work, it might be better to hire professionals or consider moving to a new house instead.
Pros and Cons of Renovating
Now that you've considered these factors, you might have a better idea of whether renovating or moving is the right choice for you. To help you make a final decision, here’s a summary of the pros and cons of renovating your existing home:
Pros of renovating:
- You can create a home that's tailored to your specific needs and preferences.
- You can add value toyour property, which could be a good investment if you plan to sell in the future.
- You can take advantage of the equity you've built up in your home to finance the renovation.
- You don't have to worry about moving costs, agent fees, and stamp duty.
- You can stay in your current location and community, which can be especially appealing if you have good neighbours and are close to work, schools, and other amenities.
Cons of renovating:
- It can be a time-consuming process, especially if you're overseeing the renovations yourself.
- It can be a big, especially if you need to hire professionals or if you're doing a major rebuild.
- You'll need to live elsewhere while the work is being done, which can be inconvenient and disruptive.
- There's always the risk that something could go wrong during the renovation process, which could increase the cost and timeline.
- If you overcapitalise, you might not be able to recoup the cost of your renovation when you sell.
Is it better to renovate or rebuild?
Renovating is more economical and time-effective option if the home repairs and updates desired are relatively minor, such as updating the kitchen space or bathroom, painting, adding a new room or a granny flat. If your desired changes are more extensive, or if the current house is in poor condition or not up to current building standards, a complete knock down and rebuild might be the better option.
Does renovating increase value?
Renovating is often a great way to add significant value to your house, especially if you focus on updating or improving high-demand areas such as the kitchen and bathroom. In most cases, you can expect your renovation to add value to your property, particularly if you're in a sought after location or if you're able to make your property more energy efficient and modern.
However, it's always useful to do your research and get a professional valuation to determine how much value your renovation is likely to add before starting any work. A luxurious property in low-demand location will likely not pay off too well.
Should I renovate or pay off the mortgage?
Deciding whether to renovate or pay off your home loan will depend on your current mortgage situation and long-term goals. If you have an exceedingly high mortgage balance and are struggling to make your payments, it may be more important to focus on paying off your home loan first.
Alternatively, if you don’t have a high mortgage balance and are financially stable, renovating your current property may be a good way to increase its value and improve your quality of life. It's important to carefully consider your financial situation and long-term goals before making a decision.
Perhaps above all, it’s important to consider how high of a priority a renovation is to you and your family.
Is it worth your time, money and energy to take on a home renovation project amongst your full-time work and other life commitments?
The answer is likely yes if your growing family is feeling cramped and need a bigger home. When it comes to living spaces and functionality for a long term family home, renovations will always be beneficial despite the cost. In this case, many homeowners will view renovating as a great opportunity to improve their lifestyle rather than turn a profit.
Hopefully this article gives you all the insights you need to decide whether to renovate, rebuild or relocate. Depending on your budget, goals, and other factors involved in your individual circumstances, any of these options can be a great choice for you.
If you love your current home yet are hesitant about the financial aspects of renovations, Driva’s renovation loans can help make those dreams come true! With a home renovation loan from Driva, you can use the funds as and when needed and break down substantial costs into smaller manageable monthly payments. This provides you the freedom to adjust your renovation plans as you go. Our team will save you the headache and do the hard work to connect you with the best rates from 1000+ finance options so you can focus on your reno plans. Check out Driva’s Renovation Loans to learn more.