Thinking about renovating? Enhance your home while adding market value
3 Feb 2016
Low interest rates are seeing a growing number of homeowners unlocking their inner builder, with as many as half of all Australian homeowners planning to renovate their property this year.
Whether it is an extension, modern facelift for a yesteryear bathroom or kitchen, or adding a garage, swimming pool or outdoor living room, these are changes that not only enhance the enjoyment of a home, but also often add serious market value to a property.
Larger renovation projects often call for a refinancing solution because they are not normally something that people can pay for from their savings – and there are a number of options that homeowners should consider before they start swinging a hammer and knocking down walls.
Spark your interest
With interest rates at an all-time low, plenty of home renovators are using these low rates as an ideal opportunity to review their existing bank home loan arrangement. Not only is this a timely opportunity to unlock some extra funds for a renovation, but it may mean moving away from their bank to a new lender, such as Credit Union SA.
Find a funding friend
Unless you happen to be an owner-builder, it's likely that you will be speaking to a range of tradespeople and other professionals when it comes to developing your renovation plans. It is important to apply that same approach to your finances, so invest time to seek professional advice as part of the process. At Credit Union SA we will make sure you understand your various options and identify the best funding solution for your specific needs and circumstances.
If you have value invested in your home, you can unlock this equity to generate cash. The difference between the value of your home and how much is still owed on any loan is a pool of funds that can be accessed for a renovation project. Many homeowners are surprised at the equity that has accumulated over a period of time as a result of rising property values and paying down a loan balance.
A Credit Union SA personal loan might be a better option to fund a smaller renovation such as a kitchen or bathroom - especially if you have a clear estimate of the total cost of the upgrade. Interest rates are typically a little higher than a home loan option - but the balance can be paid off earlier than if it was included as part of your home loan. Also the application fees and upfront fees are often much less.
Credit where it's due
Some Credit Union SA renovators have opted for a line of credit because of the pay-as-you-go convenience that it offers. This at-call facility lets homeowners access funds to pay for building stages or trades as invoices are received. Interest is charged on the balance owing rather than any total loan amount.
Another option for funding small-scale renovations is to take advantage of Credit Union SA's low rate Visa credit card. Apart from having a low ongoing rate for purchases and cash advances, fees payable are an important consideration here too. Our Visa credit card comes with low annual fees and no balance transfer fees.
Grab cash back
Credit Union SA home loans offer an option to redraw any additional repayments, which you may have made at no cost. This can be another great source to fund renovation plans and means you don't have to go through the hassle of applying for a new loan.
Have a staged approach
For renovations involving major building works, like home extension, some members want to make their dollar work as hard as it can for them, and opt for a Credit Union SA building or construction loan because it allows them to draw a loan to pay trades on a staged basis as invoices come in. If you think this might be the best option for you, make sure to confirm with a lender that you will only be charged interest on the progressive loan balance rather than the full amount.
This is general advice only and doesn’t take into account your objectives, financial situation or needs. Conditions, fees and lending criteria apply and are available on request.