With the cost of new homes skyrocketing, more and more people are turning to older homes that need renovating rather than fork out a premium. This option has the potential to turn a profit and allow homeowners to live in their desired location. However, choosing the right home to renovate can be difficult, as can securing the right loan to pay it off. In today’s blog, we look at tips on buying a house to renovate and how to find the perfect lender to get the best rate.
Buying a house to renovate
Renovating to sell or occupy?
If you’re planning on buying and renovating a property to turn a profit, you’ll want to look at low-cost renovations that add value and can be done quickly – even if they are not to your personal taste. This might include repainting, neutral carpet or modernising a kitchen or bathroom. Generally you are best to avoid large stucturtal renovations due to the risks of budget and time over runs and because you can often overcapitalise with substantial renovations. If you are looking to renovate for yourself, you have the freedom to be choosier with your renovations and not have to work to a tight time frame. It is still wise to not be too ambitious in your plans especially if you it is the first renovation you are completing.
Finding the right loan
If you have equity in your property then you can simply increase the loan limit and access the funds as and when you require. With most lenders you will need a variable loan product to be able to access the loan like this and redraw the funds in stages.
If you are doing substantial renovations, sometimes the lender will need to assess what the property is worth once the renovations are finished. In these instances you can apply for a construction home loan. With this type of loan product the valuation on completion is assessed and the bank will pay the builder instalments at various stages of the construction process.
Buying a house to renovate and need a loan? Get in touch with our mortgage broker Gold Coast team by calling 0404 403 066 or emailing loans@oaktreefinances.com.au today.
Find the right mortgage lender
Many lenders may be wary of giving out loans for places that need renovation work if the property is not livable or is run down. Seeing a broker that specialises in arranging home loans for construction and renovation projects can vastly increase the chances of securing a loan and getting a better rate.
Location is key
When it comes to buying a house to renovate, you’ll want to find the right location, and for this, we recommend sticking to the adage of ‘choosing the worst house on the best street.’ If you’ve found an in-demand area with a high median house value, buying a fixer-upper vastly increases the chances of reselling for a profit.
Create a realistic budget
It’s all too easy to overspend on renovations or to set unrealistic budgets that don’t account for unforeseeable issues or the cost of labour and materials. Creating an itemised list can help keep track of expenditure, as does building a contingency into your budget should unexpected delays occur.
Try to avoid structural renovations
If your plan is to turn a profit or avoid spending too much money quickly, you’ll need to steer clear of homes needing extensive renovation work. Many times, fixing structural issues won’t raise the value of a property to offset the costs, which is why it’s crucial to find a house with a good foundation. Cosmetic renovations, such as updating a tired-looking kitchen or amplifying outdoor space, are a great way to add value to a home without spending a fortune.
Interested to Learn More?
Are you looking at buying and renovating a property? Get in contact with Oak Tree Finances by calling 0404 403 066 or via the online form, and one of our home loan Gold Coast specialists will be in touch to discuss your unique circumstances shortly.