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Should I Renovate?

Does your home need: Ÿ

• A coat of paint
• A new kitchen or bathroom
• Repairs to the roof
• Additions to accommodate additions to your family

If you like the area you live in but your home no longer meets your needs then renovation may be the answer.

Remember that renovating is not for everyone.  Be prepared to live in a dusty mess with builders and trades people in your home anywhere from 7am—6 pm.  You could end up cooking in the lounge or bathing in the kitchen.

If it gets too bad you may even have to move out for a while.  This could increase the cost of the renovations unless you have some sympathetic family or friends who are happy to put you up for a night or two.

Before You Start

Find out how much your home would be worth after the work is done.  Make sure your renovations won't cost more than the value they add to your home.

Get quotes for all the work and put together a budget.  Consider how much you are willing to do yourself as this can cut some costs.  Plan carefully and allow for surprises especially in an older home.

Organise how you will pay for the renovations.  If you don't have enough savings you will need to borrow some money.  You can get a top up loan on your existing mortgage or you can set up a redraw or flexible loan which lets you access the money as you need it but you only pay interest on the money you have used.  Do a budget to see how much you can afford to borrow.

You need to notify your insurance company of any changes to your property.

Contact us to help you with any lending requirements you may have

Tips for Hiring Trades People

When looking for good trades people ask friends and colleagues.  Look for registered trades person on trades websites such as www.masterbuilder.org.nz.

One you have found someone ask to see some of their previous work and talk to some of their previous customers. Ask for a copy of trade registration or licenses and confirm that it is current.

Request proof of General Liability insurance such as Public Liability insurance that covers a trades person for accidents that occur to third party property caused by the trade person's work.

Conclude and finalise the contract before starting on a project.  Make sure it clearly states whether consents, permits or code of compliance certificates are required, and who will be responsible for organising them including how they will be paid for and by whom.

Always ask for a receipt whenever a payment is made.  This way, you have proof of payment if something goes wrong.  Withhold the final payment until you are satisfied with the project and have passed the final building and plumbing inspections, and, all licenses and council code of compliance certificates are issued.

Do not advance money to trades people to purchase building materials unless this has been agreed in your contract and you are sufficiently protected if something goes wrong.

Make sure all changes to the original contract, no matter how small, are documented, signed off and initialled by both parties.  

If you don’t have savings, you will need to borrow for your renovations.  If that’s the case, the first thing you need to find out is if your changes will be covered by a standard loan or if you will need a construction loan.

Standard Loans for Renovations

Renovations are usually referred to as non-structural improvements, like putting in a

• new kitchen
• bathroom

If your renovation can be covered by a standard loan, you have a few options:

• If you are mortgage free, you can borrow against your home
• If you have an existing mortgage, you may be able to access your redraw, or you could consider a top-up for the amount needed to renovate

Construction Loans for Renovations

As a general rule of thumb, if you need council approval for renovations to your home, such as extending the house, you’ll need a construction loan.  A construction loan is specifically designed with a series of checks and balances to ensure correct building standards are adhered to.  It’s important to make this distinction because carrying out structural changes to your property under a standard loan can actually constitute default.