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Something I've wondered about and have been pondering lately... how do you pay for renovations on your house?
If you plan a kitchen reno for example, do you save up till you can do it or do you get an extension on your mortgage given that it will add value to the house anyway?
We have always saved up then paid for all renovations in cash. We've only got to do our kitchen then our renos are done!
Ours were a bit different but we always have a redraw available on the house. On the current place it was renos in excess of 100k so we budgeted that in when we bought the place. As you said, if the renos will increase value by 50k and you spending 10k then it's worth it to redraw on the loan IMO ( as long as you afford the extra repayments if course) Other times it has been a combo if saving up and credit card which we pay off quickly (nothing more than 2k on there).
Hmm... We've only ever done 'repairs' type renos (new roof, new front door/plastering from water damage etc)... I would have loved to have done the bathroom and kitchen in our old place but I like having money in the bank and the option of a holiday :lol:
I kind of wondered if maybe next house we should borrow more than we buy it for and get kitchen and bathroom (or whatever needs doing) done from the beginning? Or extend the mortgage after a year or so when the value of it has gone up and pay for it that way. Maybe we should just pay for it.
I kind of thought borrowing to pay it might be the norm because I see some friends who I didn't think were flush with cash doing kitchen renos and I wonder how they afford it.
We topped up the mortgage for major renos. Just no way to do it any other way at the time and they were getting vital.
We spent probably about $500K on "renos" on this house. When we bought it 2.5 years ago we knew it needed a major overhaul so had the costs factored in, although admittedly our budget got well and truly blown - our own choice to blow it because we ended up using top quality everythings from kitchen appliances to a $8K bathtub for our ensuite. We had hoped to be mortgage free at the end of it but have ended up with a smallish mortgage. So, the first $300K or so was paid with cash that we had from the proceeds of the sale of our last house. The last of it by getting a mortgage.
My first house (which I bought alone) I borrowed a little extra at the beginning so I could redo the kitchen. Then a couple of years down the track used the redraw facility to do the bathroom.
We are trying to do bathroom reno's (see other thread about how difficult finding getting quotes!) but we have just overpaid into our mortgage and now are redrawing - interest rates have fallen since we bought and we never changed our repayments so built up a little that way too. When we got the mortgage out, we got it for amount flat was going to cost + stamp duty minus our deposit and then when got first home owners etc it sat in the mortgage account so always knew we would have a bit to draw out too. At some point we will rent this place out and will get a better rental income due to renovations + value will increase but didn't want to wait till have saved up everything as want to enjoy the new bathroom and kitchen ourselves too. (Shower is also vital as is leaking into wall - and little point in only doing that). Only problem is after paying out for big expenditure (we just got double glazing) is hard seeing interest on loan be so much higher each month because it isn't being offset by that money.
We need to do our bathroom but we are saving cash to do it. We do have a redraw facility, but because of the way our mortgage is structured, we can't justify redrawing for house renos when it's a business mortgage. But we are able to do it all ourselves so it is only a matter of paying for the materials so it wont cost as much as getting tradies in.
We added on to the mortgage for our bathroom reno. Actually had to get a personal loan for a couple of months and then paid this out when we re-did the mortgage. We also keep ahead on the mortgage so we can re-draw if needed. The hot water system just blew up and we may have to re-draw some cash to cover that.
we factored it into our mortgage.
When we got our loan we got some extra $$$$ and we were able to paint the entire house, polish all floorboards, get our blinds/curtains etc and some other things. The rest is bit by bit as we need it & can afford it. We will also make do with what we can until we can afford the major reno's. We just got a quote this morning to cement our driveway and we will build the fence ourselves. We have also come up with a shelving idea that looks nice in our laundry and will do for now. We will be done one day :)
We're in the process of doing some outside work and we are sort of paying for it as we go, as opposed to paying for it all at once. I guess if we do inside, we would do it similarly.