17 Apr 5 tips for your renovation journey
Owning your own home comes with the exciting opportunity to increase its value, ultimately building wealth for your future. Recent spikes in house prices, with an average increase of around 21% nationally last year, have led to a surge in property values. By leveraging the equity in your mortgage, you can invest in enhancing your home and lifestyle.
Many homeowners are choosing to use their growing equity to upgrade their current homes, avoiding the hassle of house-hunting, auctions and additional expenses associated with buying new property. Renovations have become a popular choice with owners utilising their loan equity to create new spaces like building extensions, home offices and upgrading kitchens and bathrooms. Not only do these projects enhance your living experience, but they can also significantly increase the value of your property.
Before diving into a renovation project, it is important to ensure you have the right lending arrangement in place. You may need to apply for finance, and your lender will conduct a home revaluation as part of the approval process. Working closely with your broker, we can streamline this process and help you avoid the complexities of applying for a new loan.
Here are a few tips to consider before starting your renovation journey:
- Obtain quotes from at least three reputable builders or suppliers to understand the project costs.
- Add a buffer of 10-20% to cover any unexpected expenses during construction.
- Discuss your renovation plan with your mortgage broker or financial adviser to align it with your wealth creation goals.
- Consult a real estate agent to assess the local market and weigh the value of renovating versus moving.
Check with your mortgage broker about whether you might be required to pay Lenders Mortgage Insurance if you go beyond the 80% loan-to-value ratio (LVR).
What is LVR? It’s insurance that protects the lender in the event you default. As a rule, lenders insist on this policy if you go over the 80% threshold.
By strategically using your home equity for renovations, you can enhance your living space, increase your property value, and secure your brighter financial future.