Are you faced with the difficult choice of whether to renovate your existing home or to move into a new one? Here are some pointers to help you come to the best decision.

Not enough space?

There comes a time in a home when you start to notice you are running out of space.  You could be falling over clutter.  Your cupboards may be full to overflowing.  Maybe there is another child on the way, or a parent is moving in.  The teenagers could need a living room of their own; or more accurately you need a space to contain the mess the teenagers make!

Not the right space?

Perhaps the opposite is true.  Your children are moving out of the house and you no longer need as many bedrooms.  It would be lovely to make some of the rooms bigger or create a guest suite.  Perhaps now is the time to start an B&B venture and generate some income.

There are many reasons why you could be faced with this choice.  Whatever the reasons, there is much to take into consideration to arrive at a decision.

But I love my home!

For many the decision to move or renovate becomes an emotional decision. Despite it being one of the most important financial decisions one needs to make, the heart can rule the head.  The home you are in may have deep sentimental value for you.  You may want to avoid moving at all costs.

It can be helpful to place your emotions aside for a moment, and to consider all aspects before taking a leap of faith.

Determine the costs

A good place to start is to determine the current value of your property.   Take into consideration your bond amount, the area you are living in, the current trends.  You can compare your property to others in the area, or get an opinion from an estate agent.  There are many free calculators available online to assist the South African homeowner to determine the value of their property.

Now consider the costs of renovation.  This should include the materials and labour that will be needed as well as the fee for the building contractor.  Consider if you will use a designer or an architect, and make provision for the cost of drawing up plans and the approval of plans.  Once you have arrived at a figure, add on a further 10% as a contingency, standard practice for building projects.  A further loan may be the best way of financing this initiative.

The next step is to compare this cost with the cost of buying a new house.  Search the Internet, visit properties in areas you like, meet a few agents; establish how much you will need to pay for a new home. Take into account the costs involved such as transfer fees, deposit amounts, municipal rates and taxes, and the cost of moving.

Is the decision clearer?

Now that you have all the costs involved, you should be in a better position to make a decision.  Will the cost of your renovation mean that you over-capitalise on your current property?  If your home is already one of the nicest in the area, your future loan money may never be recouped.  If your home is in the lower bracket of properties in your area, renovation could make financial sense, and a further loan would be money well spent.

Still can’t decide?

It is not only finances that will determine whether you should move or renovate.  Now is the time to take other things into consideration.  You can do this by weighing up the pros of each option.  Something like this:

Pros of renovating:

  •       You love the neighbourhood
  • You are close to good schools
  • You would love to put your personal stamp on your property
  • You have a trustworthy contractor

Pros of moving:

  • You want to change location
  • You want to move to a different school catchment area
  • Renovation will overcapitalise on your house
  • Moving is less disruptive than living in a building site

On balance, for you, which of the two lists is more convincing?  You should now be in a good position to make a decision.

Can a further loan finance your renovation?

If you have decided that renovation is the way you want to go, you can finance your renovation through a further loan.  This will provide you with the capital you need to implement your changes.

Do what is right for you!

Choose the right option for you and your family.  It does not matter which choice you make; it must be the right choice for you.  And once you have made a choice, implement it.

Your home is your sanctuary.  Take a leap!