Renos preferable to rebuilding: Mortgage Choice
Investors looking to rebuild their property or buy a new home may find that they are better off renovating, Australia’s largest independently-operated mortgage broker has found.
Property owners need to look at the costs associated with selling and rebuilding and compare them to renovation costs, according to Mortgage Choice.
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"When homeowners reach a point where their property no longer meets their family's needs in terms of size, functionality and/or aesthetics, it is important to conduct thorough due diligence to decide whether to update, rebuild or resell,” Mortgage Choice spokesperson Belinda Williamson said.
Some home owners may find that the current market does suit selling the existing property for a good deal elsewhere.
"Plateauing or falling property prices in some areas may be encouraging signs for those looking to buy well-priced properties more aligned to their vision of a dream home. However, buying and selling in a market with subdued property prices means some sellers may need to revise their sale price expectations,” said Ms Williamson.
However, renovations may prove to be more cost-effective with the potential to yield the same result.
"It may be that for some homeowners the extra funds needed to purchase and relocate the family to a more ideal home could be better spent upgrading the existing property,” she said.
Investors should ask local real estate agents for a market appraisal to ensure they know what price the property is worth in today’s market conditions, as well as talking to mortgage brokers and accountants to get a full understanding of the impact each decision could have on their finances.
Property owners may want to consider loan top-ups, personal loans, line of credit loans and construction loans, Ms Williamson said.
"If the homeowner can achieve their desired renovation or rebuild without over capitalising on the investment, that is, when the cost of the renovation outweighs the value it will add to the property, they may wish to give further consideration to renovating or rebuilding."
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