Three ways to finance your renovations
First and foremost, consider why are you are wanting to improve your home. Is it to maximise its value in the eyes of potential buyers prior to listing it for sale? Or is it to make the home more liveable for yourselves and capable of accommodating a growing family?
If it’s the latter, you shouldn’t be too ruthless in assessing cost/value issues if the changes add to your overall enjoyment of your home. However, it’s still worth knowing what pays off and what doesn’t.
If the cost of renovating your home is greater than the resulting increase in value, you’ve fallen into the trap of overcapitalising. An in-ground swimming pool, for example, will rarely add enough to a home’s sales price to cover its cost, and can actually reduce the number of potential buyers, because of some people’s concerns about maintenance or safety.
Before you undertake any major changes or additions, you should make sure the fundamentals are in place. No matter how grand your renovations, buyers will turn on their heels if the roof is leaking, windows are rotting and there is mould on the walls. Sort these things out first.
Probably the cheapest and most cost effective thing that most homeowners can do to transform their home is to ensure it is freshly painted to make the place bright and welcoming. Interior painting for a typical home might cost $3,000 - $6,000, but is likely to return big dividends in the impression it creates on the house overall in the minds of buyers. First impressions go a long way.
Kitchens can cost anything from $5,000 - $50,000++. In general terms, kitchen renovation is one of the best ways to add value to a home and typically returns up to $1.30 or more for every dollar you spend.
A word of caution though, this return is likely to reduce and enter into negative territory the closer you edge towards the luxury end of the kitchen market, so finding the balance is key.
Renovating a bathroom is another investment that is likely to pay off handsomely in securing a high sales price and is usually less expensive than a new kitchen, at $5,000 - $25,000 and could reap a 30%+ return on your costs. But, better still, might be to add a second bathroom which is likely to deliver even more value.
Adding a new room or extending
A same level house extension will typically cost $60,000 and upwards, and budgets are notorious for blowing out from what was originally planned as unexpected expenses occur. Adding or extending a living area may be good for a growing family, but it probably won’t justify its cost. It also certainly won’t add as much value as adding a fourth bedroom to a three-bedroom house, which will change the whole value bracket of your home to buyers.
Accentuate the positive
Often it’s worth renovating to the minimum if possible. Instead, accentuate the best aspects of your home. If you have windows that aren’t positioned to make the most of great views or the sun, re-positioning or enlarging them will be a relatively small price to pay for a significant improvement that capitalises on the natural attributes of your home.
Or, instead of adding a room, reinvent an existing one; convert the attic into a bedroom or the basement into a rumpus room or office. This type of creative renovation is likely to result in the greatest cost/value outcome.
Builder’s Crack Cost Estimator
For a rule-of-thumb cost estimate of a variety of renovation projects, use the cost estimator at Builder’s Crack. If you’re interested in renovating your home, get in touch with us and find out how you could finance it.
Pay for home renovations, big purchases, and/or events and if it's insulation or heating you need, you could be eligible for a special home loan top up.