Renovate or build
For many who currently live in an established area (or are looking at moving into one), the decision on whether or not to renovate their existing home or demolish and build, is a difficult one to make, Here are a few things to consider:
Renovate
Pros
Renovating is ideal for when you really love certain features of your existing home or you have a very strong emotional connection to the home or the home has some significant heritage or architectural value.
It may allow you to still live in your home whilst renovations take place, meaning no rental outlay or moving neighbourhood.
No costs associated with buying and selling property and you know who your neighbours are.
Cons
Living in a home that is being renovated can be stressful and cause disruption to the family.
An extensive renovation or one that incorporates major structural changes can often be a lot more expensive than building new.
Once renovating starts, hidden issues can cause delays or extra costs as the renovation gets underway.
In renovating an existing home, it must be remembered that you will still have half an old home, sometimes things like plumbing, electrical, pre-existing issues may still present an issue.
Even a very well renovated home will still deteriorate at a quicker rate than a home built from scratch.
It may be very difficult to get the valuation to match, this is particularly relevant in the instance of trying to get finance.
Demolish and build
Pros
Perfect for when you love the location but not the home.
You can start with a clean slate to design a home exactly for your lifestyle.
New homes are easier to maintain and more energy efficient. Building practices and regulations are also much better these days and a new home comes with the added peace of mind of a long warranty on the construction. A new home will be more economical to run and to maintain with most new homes needing to meet a 6 star rating.
Cons
Rental outlay is required while the home is under construction.
While the actual demolition generally only takes a few days, depending on the block, constructing a new home can take longer than renovating if significant works are required to prepare the block prior to laying the slab.
If you’re buying a new property for your demolish and build project, there are associated buying costs.
Financing your renovation or demolition and build
Demolition Costs
As a ballpark figure, a demolition in Perth cost around $20,000, but it can be more or less depending on the project. Clever home designs can assist you to arrange your demolition and advise on all that you need to think about and prepare to make sure it goes smoothly.
Valuation & Avoiding over-capitalisation
Unless you’re paying cash for your renovation, your lender will undertake a valuation of your property’s current worth, as well as what it will be worth post-renovation. This can affect how much you can borrow, so it’s important to understand this first before you get too far down the track of your renovation design.
If you’d like to get an initial idea for a renovation, find out how much your home would cost if you were to buy a similar property on the market. This will help you understand how much you can spend and help you avoid over-capitalising.
Similarly, lenders will get a valuation prior to providing approval for demolition and build, so it’s important to ensure you have your lender’s approval before you commence your demolition too. When financing either a renovation or a new home build, it pays to talk to a construction finance specialist or your bank who can assist you with arranging your home loan via their large lender panel and help guide you through the process, every step of the way.
