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Should you renovate or relocate? How to decide what option makes sense for your situation
If you're no longer happy with your home, you can either renovate or relocate.
When you’ve decided that your current home no longer complements your lifestyle and you can’t make up your mind about whether it’s time to upgrade your existing home or to move to a new location, this practical advice and list of considerations may be able to help you decide.
Renovating your existing property allows you to create the home you want in the location that you’re already settled in. However, a home remodel also comes with various challenges, including the disruption factor, the need to temporarily vacate, as well as the expense and time involved.
These are common signs that a renovation may be the right choice for your situation:
- You plan to stay in the area for a long time
- Your neighborhood provides the amenities and necessities that suit your lifestyle
- You have the time and budget to invest in a renovation project
- You live in a desirable neighborhood
- The homes in your area are increasing in value
- You’re prepared (and have the funds) to temporarily vacate if necessary
Whether you’re planning a major home remodel or just some small cosmetic repairs, renovating your property can offer several benefits:
- Added value. A well-planned renovation can add between 10-15% to the property’s original value — especially if you plan to hold on to the property for at least 5 years. Speak to a real estate agent or get a house appraisal to get a feel for how much worth your renovation can add.
- Boost sale price. A carefully planned renovation can increase the property sale price. Take proactive measures to ensure that your property will appeal to a large pool of prospective buyers if you’re planning to sell in the future.
- Avoid sale and purchase costs. Although a renovation can be expensive, you’ll avoid a laundry list of extra costs the come with selling and purchasing a new home.
- Upgrade to your picture perfect home. You can plan your renovation in a way that specifically meets your needs. Whether it’s a growing family, a home office or a retirement lifestyle, you can reconfigure the layout and functionality of your home to make it an ideal space.
- Inspections. Before you renovate your existing property, you should get a building and pest inspection to see if there are any structural factors that could throw a wrench into your renovation project.
- Budget. It can be easy to blow out your budget when renovating. This is why you should speak with an accountant or financial planner to help you stay on track. On top of your initial budget, you should factor in an extra 10% of what you put aside for your remodel to allow for any problems that might pop up.
- Careful planning. Renovating requires careful planning for successful execution, so consider whether you have the time and resources to make a renovation work. There are many home renovation planning apps available that can help you plan and get your project going.
The total average cost for a major renovation could be anywhere from $15,000 all the way up to and exceeding $100,000 — however the cost will vary depending on the type and scale of the project.
You’ll need to factor in costs for:
- Professional advice
- Building permits
- Initial blueprint
- Building inspection
- Labor and installation
- Material costs
- Costs attached to the loan
How can you finance a renovation?
There are several options people commonly use to fund renovation:
- With savings
- Personal or home loan
- Home equity loan
- Taking out a construction loan
Apply for financing
Before you decide to renovate, talk with professionals to help you make the right decision. Speak to your bank manager, accountant, financial planner, contractor and local real estate agent to make sure that the renovation is feasible and realistic.
These professionals can help you determine the scope of the renovation, whether it can be achieved on time and on budget and help you avoid pitfalls that can arise with a home remodel.
If the renovation numbers don’t add up or the work involved is too extensive, then relocating may be a better option for you. Relocating involves selling your existing home and purchasing a new one.
It may be time to relocate if:
- The property doesn’t work with your lifestyle
- The amenities of the neighborhood no longer meet your needs
- The market presents a good time to sell
- You can afford to move
- Lifestyle needs. It may be beneficial to sell your house and move to a new area to keep up with your lifestyle needs. For instance, if you previously lived in a low socioeconomic area with a high crime rate and you’re planning on having children, you may want to move to an area that offers greater security with a striving school system.
- Property needs. If your existing property is run down or outdated and you have no desire for renovation, moving into a new home could be the right option.
- Ready to sell? You’ll need to get your property ready to put on the market and find ways to boost the sell-ability of your home. This may involve minor repairs, cleaning and staging rooms throughout the house. You could consider hiring a local real estate agent to guide you through the sale process.
- New location. Carefully consider whether the market offers positive price growth and better capital gains potential in the neighborhood you want to move to. You may also want to think about the lifestyle your family has and whether it has the amenities you need.
- Logistics. You’ll need to carefully plan the logistics of moving out of your current property and moving into the new one, including comparing rates from different moving companies.
- Cash-flow. When selling, you’ll need to think about the money you’ll make from the sale, as well as any tax implications. With the help of an accountant or financial planner, you can figure out whether you need to take out a new loan or refinance your existing loan.
If you decide to relocate, you’ll need to budget for:
- Cleaning and prepping your home
- Minor repairs
- Sale costs
- Loan exit fees
- Closing costs
- Moving expenses
Compare home loans below if relocating makes sense for your personal situation.
Compare mortgage lendersCompare top brands by home loan type, state availability and credit score. Select See rates to provide the lender with basic property and financial details for personalized rates.
When relocating, it’s a good idea to speak to a local real estate agent or appraiser to help you coordinate the logistics of moving from one property to another.
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