renovate

Whether you are planning to rent out your house, live in it or sell it, your home is an investment. Strategic renovations can help you to maximise your investment, but it is important not to overcapitalise. Overcapitalising refers to renovations that cost more than the value they add to the property.

Here are a few things to consider whether you are trying to make your property more attractive to renters or future buyers.

Get a valuation

Know how much your property is worth. A general rule of thumb is that a renovation should not be more than 10% of a property’s valuation. If you have owned your property for a while it’s important to get an independent valuation.

Location, location, location

What are other houses in your area selling for? Areas tend to have a ceiling value and spending a fortune on a renovation in an area that renters are unwilling to pay a premium for is a costly mistake.

Focus on certain areas

Certain renovations add more value than others, for example improving the curb appeal, making the house more energy efficient or updating the kitchen. Other renovations add little to the price of the house, such as building a home office when using a spare bedroom will suffice.

Too personal

Think about what will make the home appealing to the widest group of people. It’s a good idea to avoid painting the walls or choosing benchtops and splashbacks in bright colours, which may put off some buyers. Also, while adding a swimming pool or spa bath might appeal to your family, it might put off potential buyers worried about the upkeep.

Look out for hidden costs

Will you live on site during the renovation or do you need to pay to store your furniture and rent other accommodation? Have you costed in all the little things like towel rails, new appliances and window coverings? The little things can quickly add up.

If you are planning a major renovation you may want to consider refinancing your home loan. Refinancing to renovate is the most popular reason for refinancing and can be a great way to add value to your property. Use a mortgage calculator or book a free consult with a mortgage broker, to help you figure out the cost of repayments. They can also help you to dot all the ‘i’s’ and cross all the ‘t’s’ when it comes to the paperwork.

Contact the friendly team at ActonLendingSolutions to find out more about refinancing to renovate.