By Samuel Rosenberg
YOU often hear experts suggest that investing in property is a great idea, both for long-term security and continuing growth. Family and friends will continue to advise you to purchase your first property and move up to bigger properties as your career and financial position allows and as your family grows. What if you can’t qualify for a new mortgage or afford a larger property? Perhaps improving your current home becomes your best choice.
Regrettably, selling property at the best price is frequently difficult, especially when you are competing against similar properties and in a difficult market place. By improving your home, you can increase the resale value of your home. Even small improvements can help increase profits from your sale.
Depending on your choice of home improvement, not all choices need be expensive, but many options are. You don’t have to renovate everything all at once, unless you are intending to sell the property as soon as possible. You can plan and stage your home improvements over a number of months or years. When you are carrying out the work yourself it is better to choose smaller areas in your home to complete, rather than trying to finish everything by year-end. Even where you employ professionals to carry out the work, how long do you want your family and home to be compromised and difficult to live in?
By planning your improvements over a longer period of time, it may be easier to stretch your budget to accommodate more over the years ahead.
Ideally, you should be paying, for the upgrading of your property, from your savings. There are options to finance the renovation but in such instances you have to budget for the additional cost of interest. By planning ahead, you may decide to only carry out the work when you have sufficient savings set aside for these tasks.
Should you already own a large mortgage, your bank or other finance company may not allow you to borrow any more money at straightforward mortgage rates, but they might still lend you the finances that you need, but at unsecured rates, which are always much higher.
Where you have sufficient equity in your home, your mortgage company may well offer you the best possible deal for your money if you do not have the savings at present.
Where you may be planning to sell the property in the next few months, you may wish to access short-term financing as a clear alternative, because you know that you can clear the debt in a short period of time; but what if you can’t sell?
Carefully budgeting for your renovation is vital to the success of your project. Many home improvements quickly go over budget and many people run out of cash and have to turn to their credit cards or other loan facilities to complete their objective.
Kitchens, bathrooms, roofs, windows and outdoor improvements can quickly add to the value of your property by making a great first impression on those inspecting your house. Adversely, adding a swimming pool or garage conversion or spending too much money on the upgrade compared to the possible return, are indicators that your home improvement choices may be mistaken.
Whether you intend to stay in the property or sell it after you have completed the home improvements, budgeting properly for the work, with money available from your savings, will provide you with the best results.
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Samuel Rosenberg is the founder and CEO of Axcel Finance Ltd., the leading regional microfinance institution. Share your thoughts and email your questions to [email protected]