So, you might be slowly coming to the realisation your home isn’t quite working for you anymore. It may be that your home just isn’t doing it for you anymore, the life outside of your home has moved further away or perhaps you’ve simply outgrown your house.
Now your children are older and need more space and independence, your quaint home may not feel so “adorable” anymore. The home you imagined your family growing up together in, now feels cramped and a little ‘overstuffed’. On top of that, children these days are now staying and living at home for longer, so you may need to start thinking about having adult children at home in the future as well.
Most families in your situation then have the conundrum – “do we renovate or move to a larger home?”
The decision isn’t easy. Your little spot on the map has defined you as a family so that now you can’t imagine living anywhere else. Your neighbours are now your friends and the children have grown up playing in the backyard. With so many memories created, it’s bittersweet, because now the nostalgia is mixed with apprehension – you want to be sure your next home will be as enjoyable as this one has been.
The big decision of whether to renovate or move can be made easier as long as you are prepared to do a little research.
Below are six things to consider when thinking about renovating vs moving / relocating.
Get a valuation
A good starting point is to find out how much your property is currently worth. This will form the basis to help you make a quicker decision about whether it’s worth spending money on renovations or if your family is better off moving.
Do your research
Once you have an idea of how much your property is worth, it’s wise to do some research into the value of other homes in your area, taking into account rental returns and sales prices. Neighbourhoods will generally have a ceiling value, meaning a certain threshold buyers and renters are willing to pay to move in. Real estate websites are a good source for rental and sale prices. This worthwhile information should be used as basis to prevent you from spending too much if you do decide to stay put and renovate.
Don’t over-capitilise
Make sure you’re renovating for profit, and not over-capitalising. Think of your home as a long-term investment., meaning renovations shouldn’t be just about making your home easier to live in. Make sure you’re adding real value so that if do sell in the future, there will be a return on the money you’ve spent. Over capitalising means spending money on a home to improve it beyond its resale value. For example, spending $50,000 on renovations to find out the value of the home has only increased by $10,000 or $20,000.
Figure Out Your Budget
Whether you decide to renovate or move, there will be expenses. Make use of online calculators and budget tools. Also, consider setting up a spreadsheet to objectively compare the costs of renovating vs moving. It’s essential to formulate a budget, particularly for renovating, as it’s easy to overspend without a budget. When you know how much you’re willing to spend on either choice, you can start getting your finances in order.
Think About Your Future
You may have bought the home you’re in because it was convenient for your family at the time. Now that the children are older, they may be booked in to schools that are not so conveniently located to your home. A change in jobs may mean the commute to work has changed. As the children get older, their independence gets greater so being close to transport is important if you don’t want to be the taxi every single time they want to go and see their friends. Unfortunately, making your home bigger is not going to change the location of the home!
Speak to your mortgage broker / lender
Whether you’re buying a new home or want to borrow for some renovations, talk to your lender as soon as possible. If you decide to move, you’ll need to work out if you sell or buy first (see our article ‘Should You Buy or Sell First’). Having a chat with your lender will let you know how much you can borrow for either scenario. Sometimes these chats with your lender can make the decision for you!.