Looking to renovate? Whether you’re upgrading the home you currently own or buying a fixer upper there are some things to consider.
Understand the current state of your property
Before you begin on renovations and construction, you may need to organise a building inspection, a pest inspection and a land area survey. This step provides you with the peace of mind of knowing your house is structurally sound and will be able to withstand a renovation, as well as to check that your boundary lines are in the right position to avoid encroaching on your neighbours’ property.
If you’ve bought an apartment or unit in a Strata Scheme you will need to check with the Owners Corporation before you commence renovations to see what is allowed. The building report should give an indication of the state of the apartment building and any structural issues. There may also be rules around times you can renovate to ensure you don’t disrupt others in the building.
Property appraisal and researching the suburb
Get your property appraised to find out its current value as this will help your budgeting to ensure you’re not over capitalising. This occurs when the amount of money you invest into renovations exceeds how much value it adds to your property.
Renovations can be large or small so talking to a local real estate agent can help you get an understanding of what value will be added to your home after the upgrades you plan to make. If you are creating something special you may be willing to spend a bit extra, especially if it’s for a home you’d like to live in for a while.
Create a budget
Now that you have a ballpark figure, you can create a budget for your project that will ensure you don’t overcapitalise. Some of the costs you’ll need to factor into your budget are labour, materials, permits and council fees, design fees, inspection costs and repayments for finance if required.
Needs and wants
Needs are must haves and wants are nice to have. Make a list of what you need and want in your renovation. Get quotes for each item and add up the items on the list. If they exceed your budget, you may need to remove items or look for more affordable alternatives.
Renovations are costly and you’ll need to decide how to finance your project. There are several options to consider, some of which include:
- Dipping into your savings, this may be in an Offset or Redraw account.
- Accessing the equity in your property, either by topping up your home loan with your existing lender or refinancing with another lender.
- Looking at other finance such as a personal loan, however be aware that these loans often come with a significantly higher interest rate than a home loan.
If you decide to borrow to fund your renovation, be sure you're fully aware of the additional repayments you'll need to make on top of any existing loan obligations.
Choose the right builders and tradespersons
This is a crucial step of the renovating journey and can make or break your home improvement. Start by sourcing reviews of potential contractors – be sure you’re employing reputable, licensed builders and tradespersons. Legitimate builders and tradespersons will be happy to provide contacts and references of recent jobs completed. Don’t rule out visits of these past jobs to double check the quality of the prospective suppliers workmanship, and to check if they were completed on schedule and on budget.
Will I need alternative accommodation when renovating?
On top of all the above considerations and depending on the size of your project, you may also need to factor in rental costs, if you have to live elsewhere during the renovations. Unless you have the help of generous friends and family, this could be a significant added cost to consider when budgeting for your renovations.