Your home: Should you add on or just move on?
After a while, most homeowners find something about their home that they really wish was different and that they feel they must change, either by making alterations or by moving.
"Of course the problem might be something beyond the actual walls of your home, like the fact that your once-quiet suburban street has now become a much busier and noisier route, or that you have changed jobs and now face a long daily commute, or that a new development has changed the whole character of the area," says Gerhard Kotzé, MD of the RealNet estate agency group, "and in that case moving will usually be the best as well as the most the obvious solution".
But more often, the problem relates to the fact that families are constantly evolving, through an increase in income for example, or the birth of children and the acquisition of more possessions. "This means that the lovely little house you started out in can quickly become a very full space where you feel you have too few bedrooms, too little privacy and too many toys, tools or gadgets."
It's at this stage, he says, that many owners start to think seriously about altering their homes to create more space rather than moving - especially if they still like the area that they live in.
"However before they do, they need to ask themselves if this makes sense financially. Will the cost of the additions or alterations needed to give you the extra space really be less than the cost of selling up, buying a bigger home and moving? Or if the value of your home is already pretty close to the price ceiling for your area, what is the risk attached to spending a lot of money on renovating the kitchen or bathrooms?"
Kotzé says the truth is that you will very seldom be able to recover the full costs of additions or alterations if you should suddenly need to sell soon after they have been completed. "The changes might add to the appeal of your home for prospective buyers, but will usually not add to the price they are willing to pay - which will still need to be competitive for your area.
"In fact to get the maximum benefit out of any alterations you make, you need to be fairly sure that they will make it possible and comfortable for you and your family to stay on in your home for at least the next few years."
He says other vital issues to consider before you decide to renovate rather than relocate include the following:
- Whether your local authority or home owners' association will allow you to make the additions or alterations you want. You need to find out before you go any further, and what the requirements and costs are to get planning approval.
- Whether you can afford the alterations. These often turn out to be much more expensive than expected and will most likely increase your debt, so get quotes from building professionals before you decide to go ahead.
- The possibility of a move in the same area. If you've been paying your bond for a few years and live in an area where prices have gone up, you probably already have enough equity in your home for a decent deposit on a new one. And if you really like your area, there's no rule that says you can't just move to a bigger home up the road rather than to a different suburb. You should consult with a qualified and experienced local estate agent to explore your options.
Kotzé also notes that it is much easier to qualify for a new home loan now than it was a few years ago. "The banks are actively competing for your business and if you have a low debt load, clean credit record and a sizeable deposit, you are quite likely to also qualify for an interest rate concession that will lower your monthly bond repayments and enable you to save thousands on the total cost of the property over the lifetime of your loan.
"You should seek advice about this from a reputable bond originator and, if you do decide to go house-hunting rather than alter your existing home, make sure you obtain bond pre-qualification first. This will make not only give you a good idea of what you can afford, but also give you the edge when negotiating with sellers."