One of the advantages of being a homeowner is getting to decide how your residence looks and functions. You can customize your home to fit your lifestyle.
But what happens when your needs or tastes change, and suddenly your home’s looks or functionality isn’t to your liking anymore? For most people, this leads to thoughts of either renovating their current home or moving to another one. There are pros and cons to each side of that decision, and here are some things to consider:
Know your home’s limits
Sometimes, homeowners want massive changes to a home’s footprint – removing walls, adding windows or doors, etc. But every home is engineered to be structurally sound the way it was built. Projects such as removing walls or adding windows might threaten that structural integrity.
That means you simply might not be able to do everything you want to do during a renovation. If your plans are structure-altering in scope, it’s a must to consult with a master design builder experiend in Home renovations and extensions and/or a contractor experienced in home construction to determine whether your vision is even possible. This could include a second storey. If it’s not, do you want to spend money on something that’s less than your ideal?
How much is too much?
Once you know the renovation can be done, the obvious next step is determining what it will cost. And this is where it gets tricky.
A homeowner could, for example, spend $5,000 for a minor kitchen spruce-up, or pay $100,000 for a major overhaul. Aside from the question of what you can spend, there’s also the matter of what you should spend.
The general rule of thumb is that with kitchen and bath renovations, you can recoup somewhere around 75 percent of your cost in your home’s value. But if you live in a $200,000 home in a neighborhood of other $200,000 homes, your home won’t be instantly worth $275,000 just because you spend $100,000 on a new kitchen. It might not be financially responsible to spend half your home’s value to renovate it. It’s this realization that often leads homeowners to think about moving.
Calculate all the costs of moving
If moving to a different home becomes an option, it’s important to weigh all the costs compared to a renovation.
For example, if you move to an existing house, will you need to remodel that one to your exact liking? If you want everything your way as soon as you move in, is new construction a consideration? That’s the way to fully customize a home, but it’s typically more expensive than buying an existing one.
There are other costs to weigh beyond actual home price, too. If you take out a new mortgage, you’ll be paying interest over many years. It’s easy to say “If we’re going to spend $100,000 on a renovation, we might as well put it toward a new house.” But over a 30-year mortgage, that $100,000 will also come with tens of thousands of dollars in interest. Using your existing home’s equity to pay for a renovation would likely result in interest charges, too, but the rate on an equity line of credit is usually lower than on a mortgage.
Speaking of equity, if you’re close to paying off an existing mortgage, or even halfway through a 30-year home loan, do you want to sign up for a new mortgage and start that clock ticking again? There are opportunity costs with every decision, and the opportunity to have no house payment in a shorter period of time is a real one.
Remember, too, that changing houses might also include paying a moving company as well as buying new furnishings. These are sometimes home-buying costs that “move-up” buyers don’t always consider when deciding to move.
There’s no hard-and-fast rule on whether to renovate or move, and it truly is a personal decision. It helps to weigh all the factors involved – and they’re not all obvious – when making that decision.
About The Author
Adam Morgan is logistics manager at Men That Move the best removalists Sydney that provides local moves in Sydney and Melbourne as well as interstate moves sydney and Melbourne . Adam also enjoys writing in his spare time and providing up to date information in the logistics and moving industry.