Homeowners: should you move or improve?
More people than ever are choosing to improve their existing property instead of moving to a new home, but what are the financial considerations?
Should you stay or should you go? It’s the question on the minds of many homeowners as we enter the busiest time of year for home improvement loans and mortgage applications, according to Freedom Finance.
This is when Brits turn their attention to their homes, but should you look for somewhere new or improve on what you’ve got?
Andy Fisher, managing director of the lending platform, said: “For some people, simple renovations can add a huge amount of value to their property, while for others, it will be best to look for something new. However, it is not always easy to know which is the right path to take.
“There are many things to consider and it’s important to arm yourself with the relevant facts to ensure you make an informed choice.”
Freedom Finance has listed the key considerations when making this big decision:
The case for moving
- If you need a change of location – whether you need to be in a better school catchment area, or be within commuting distance of a new job, this is a clear-cut case
- If you can’t cope with the disruption – remember that significant renovations can take a long time and can be extremely inconvenient, which means they’re not for everyone
- If there is not enough space and no opportunity to add more – if you are looking for space and there is no option to extend then this is an obvious deal breaker
- If you could take a significant step up – with mortgage rates remaining so low, you might be able to afford a bigger or better home than you think. It is worth speaking to an adviser about your situation and doing some sums.
The benefits of improving
- If there is room for improvement – adding space will generally add value to your home, so consider staying if you have the option to add some significant square footage
- If you don’t have a lot of equity in your home – this will make it harder to afford a new property, especially when you consider the cost of moving. Don’t forget about solicitor’s fees, estate agent’s fees and stamp duty
- If the improvements will add value – while a bar in the lounge might be something you have always wanted, it won’t be for everyone! Stick to neutral and modern renovations that will have mass appeal and will make the biggest difference – think kitchens and bathrooms
- If your existing mortgage isn’t portable – check the terms on your current mortgage. If you have agreed a fixed rate on your current home for a set period, there may be a hefty charge if you have to pay it off early to move home
- If you can renovate for next to nothing – do your research on what value you might be able to add. Consider similar homes in your area and speak to local estate agents. If you think your proposed renovations will add more to the value of your home than it will cost you to complete them, then you can be confident this is the right decision.