The Big Question. Do We Buy or Do We Extend?
12 April 2019
People have many different reasons as to why they want to increase the size of their property. Maybe the family is increasing, the kids are getting bigger and older, the grandparents are moving in or maybe you want a parents retreat away from the noise of the house. Whatever the reasons are for needing more space, home owners have to tackle the big question, do we extend or do we sell and buy a bigger home?
It can be a very difficult question to answer, if you love the area that you are in and have the space and options to extend then extending could be the option for you. Generally speaking, selling and buying in the same market is not always very economical, however if there is a house that you find that ticks all the boxes and you can afford the additional repayments then absolutely jump at the chance.
If you love your area but want a bigger home then you have to consider the fact that you may not be able to afford bigger, that you may have to move to a different suburb, which can hugely affect day to day life. Will the kids have to move school? How far away is it from work and family? What infrastructure is in the area? All of these unknowns can help make the decision.
Move or Improve?
When it comes to how much you should spend on the renovation, you need to ask yourself what your intention is. Have a 5 year plan to enjoy the improvements that you have made and in that time the equity in the property will have most likey increased.
You will have to be willing to live in a building site for the duration of the renovation or find alternative accommodation. This can be tricky if there are kids involved (speaking from experience) but its possible.
You can borrow against the equity in your home, banks will lend up to 80% LVR ( Loan Value Ratio) as long as you can service the additional borrowing.
Costs involved with selling the property ( agent commission, bank fees, legal fees etc ) could be a considerable amount towards the actual extension.
If you decide to sell
- See what else is out there and what your house would be comparable to. Find a way to stand out from the crowd.
- Find an experienced agent, potentially one that was used by a friend and who has first hand experience with that person. A great agent can make all the difference.
If you decide to extend
- Set a time frame and stick to it.
- Hire a qualified team of builders and quantity surveyor to estimate costs. Allow for a 10-20% extra in the budget for unforeseen circumstances.
- Draw up your plan and stick to it, if you keep making changes you will incur additional costs as well as running over on the time frame.
Which ever you decide to do Panda can help negotiate the best rates for you.
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