The reasons for staying where you are and renovating or moving to a home that better suits your requirements will not only have a financial impact one way or the other for you and your family, but an emotional toll as well.

Now we are not emotional experts, but we have seen the stress it can cause families in both the situations of renovating and moving.

Sometimes the emotions are high because of financial reasons: the cost of renovations blows out, or you can’t afford to move to your new dream home.

Whatever decision you decide to make, we are your ally when it comes to helping understand the financial decisions and consequences of both.

We can help you with either renovation and construction finance or transferring or replacing your existing loan with a new property.

Let us at least take that one frustration away from your decision.

It used to be simple to calculate the financial differences between each, especially in a property market that is not moving (either up or down), and when supply, demand and pricing are well aligned.

So, before we start to talk about the financial benefits of one over the other, we need to have a look at the current construction and home building industry.

Demand and building approvals in 2021 were up by 26% from the previous year according to the ABS (Australian Bureau of Statistics)1.

But what has put the construction industry in a spin is:

• the extraordinary building cost blowouts, proving to be a substantial headache for property owners
• significant time delays for supplies, adding more costs – materials you ordered a year or so ago are now 20% to 30% higher in today’s pricing
• a shortage of building materials
• a shortage of skilled tradespeople2, and
• it appears this is not going to change in the short term.

Apart from the new furniture, fittings and building costs, additional costs while renovating are:

• architectural and planning fees
• demolition, rubbish removal and dumping fees
• permits
• rental costs if you need to move out during the renovation

We also know that selling and moving comes with certain financial and emotional costs as well.

Costs to sell your home:

• Agent fees
• Marketing and advertising
• Conveyancing/solicitor fees
• Lender fees (early exit and mortgage discharge fees)
• Styling and staging your property for maximum sale price
• Maintenance or small improvement costs to the property before selling
• Capital gains tax (if you have rented out the property at some stage, or had it on short stay accommodation places like Airbnb)

Costs in buying and moving to your new home

• Stamp duty
• Building and pest inspection reports
• Mortgage registration fees
• Transfer fees
• Loan applications fees
• Possibly LMI3 if not borrowing at 80% LVR4
• Conveyancer fees
• Council and water cross over rates
• Potential insurance premium increases: house and contents and cars (policies and pricing depend on value and suburbs)
• Moving and relocation fees

So before you make a decision on what is the best way to move forward, let’s catch up to explore:

• your potential borrowing capacity for a new home,
  and
• the equity and funding available for renovation.

You will then know your renovation or new home budget and can start costing the differences.

Perhaps understanding your financial position first will help with your decision.