Should you build buy or renovate

There’s more than one way to make your home just right for you. So let’s weigh up the pros and cons of building, buying or renovating your home. 

If you’re like me you’ve spent more time at home in 2020 than any other year. And that’s probably given you plenty of time to think about what you want life at home to look like. 

Whether you want more space, more light, a bigger backyard, a nicer kitchen – it’s all achievable if you set your mind (and a realistic budget!) to it. But one of the big questions you need to ask yourself is how you want to change your living space. In other words, should you build, buy or renovate?

To build…

It’s an exciting prospect to be able to design and build a home from scratch, so you can make everything just the way you want it. 

One of the big decisions for potential home builders is finding the right piece of land that suits the size and shape of your perfect home, and of course leaves you enough money to build everything you want. That might mean you need to compromise on location – maybe taking you further out from city centres, or into regional areas, where you can get better bang for your buck. 

For some that’s a great opportunity, for others it’s a deal-breaker. It all comes down to what’s most important to you. But when you’re investing a considerable amount of money into building a home, it’s worth doing some research on the most suitable area for you in terms of transport, parks and amenities, shops, schools etc. 

You also need to decide whether you want to engage an architect to design something specifically for you, or whether you want a project home that’s ready to build “off the shelf” – even if it’s not exactly what you’d design for yourself. Again, this may come down to budget, so it’s essential you sit down and work out how much you can comfortably afford to spend. 

To buy…

The easiest way to get a home that ticks more of your boxes is to buy one that already exists. You can just move in and get on with your life – without even picking up a shovel.

That sounds great in theory, but Australian real estate can be expensive. So finding a place that’s “just right” in an area you really want to live in is unrealistic for many people, at least for now. 

If you already have a home, another downside of selling and buying is that you’ll be paying another round of stamp duty. And that’s money that could go towards the cost of renovating your existing home.

Also, if you’re quite specific about your requirements, it could take years to find an existing house that hits the spot. And if you compromise too much, you may need to factor in the cost of a renovation anyway. Or another move!   

To renovate…

A popular way to get the home you want, in an area you like, is to renovate your current home or buy something that needs work. This can give you the best of both worlds in terms of a great location and a home that’s been updated to suit you.

As with every option, budget will be a key consideration with any renovation. How much extra will you need to borrow to do the work you want to do? And if you’re buying a “renovator’s delight”, will you even know what you’ll need to spend when you sign on the dotted line? 

Renovations are often harder to price due to unknown factors that may not initially present themselves – like rotten floorboards or dodgy electricals. That doesn’t make renovating a bad idea, it just means you need to leave some room in your budget to cover contingencies. 

That said, one major benefit of renovating, compared to building from scratch, is that you don’t necessarily need to do it all at once. That can help you spread the cost over time. 

So what’s the verdict?

Right now your heart is probably favouring one of these options. But does your head (and wallet) agree? Before you make any decisions, talk to a RAMS Home Loan Specialist. They can listen to your plans and offer friendly guidance and advice on how you can make your property dreams come true. 

What government support is available?

HomeBuilder grant

To support the residential construction sector through COVID-19, the Federal Government announced a $25,000 contribution for eligible major renovations and new builds. To be eligible: 

• your annual income must be less than $125,000 for an individual or $200,000 for a couple (based on your 2018-19 tax returns or later)
• you need to spend over $150,000 on a renovation or under $750,000 on a new build 
• the value of the existing home must not be more than $1.5 million
• you need to enter into a building contract between June 4, 2020 and December 31, 2020, and
• construction must commence within three months of the contract date. 

Different states may have different rules, but you can learn more at treasury.gov.au/coronavirus/homebuilder.

First Home Owner Grant

The First Home Owner Grant is a one-off payment and/or stamp duty exemption given to first home buyers who meet the eligibility criteria. Rules may differ depending on whether you’re buying an existing home or building from scratch. Check your state’s grants and eligibility criteria at http://www.firsthome.gov.au/.