If you’ve been thinking of renovating, then now may be the time to put your thoughts into action. Interest rates are low, and refinancing so that you can renovate on a budget has never been more affordable.
But, to renovate efficiently you first need to plan your renovation project and know what costs are involved. Then it is vital that you research the mortgage market to find the best home loan package to suit your personal financial needs.
Setting your renovation budget before you consider refinancing, will save you in the long run and it will enable you to keep your costs to a minimum. Otherwise you may borrow far too much and then be stuck paying higher monthly repayments than you need to.
The general rule of thumb when renovating is that you should never spend more than 10 percent of your home’s current market value. So if your home is worth $550,000 then your budget should be no more than $55,000. Of course, this doesn’t mean that you have to spend this much. Instead, use this as a maximum limit. Next, consider how much you can afford to borrow, if you cannot finance the renovation yourself.
Draw Up a Renovation Plan
Grab a pen and paper, list down all of your renovation ideas and then number these from 1 to 10 in the order of the priority that you wish to complete these projects in. If you’re renovating to sell then select the project that will give you the most return on investment.
Next, work out the costs of each project. Include paint, timber, tiles and even hinges, bolts and fixtures and fittings. Also consider whether you can carry out the work yourself or whether you need to hire a professional as this will add more to your renovation costs.
Refinancing to Renovate
If you cannot afford to finance the renovations yourself, then refinancing may be the best option. Refinancing basically means paying out your existing home loan and taking out a new loan that better suits your needs. This new loan can be taken out with either your existing or a new lender.
In order to find the right home loan to suit your requirements you can either conduct your own independent research and, or also contact a mortgage broker. A mortgage broker takes the hard-work out of home loan comparison and will make your search for ‘the right’ mortgage easier. They can also offer you helpful advice and guide you through the home loan process.
Are you thinking of refinancing to renovate? If so, then contact eChoice and find the right home loan for YOU today.
Written by eChoice