Paying For Renovations
The Ins & Outs Of Renovation Loans in NZs
Renovation financing in New Zealand
Renovating your home in Auckland? From sleek kitchens, and modern spacious bathrooms to complete home transformations, breathing new life into outdated spaces can improve your day-to-day living and significantly boost the value of your property. However, the financial commitment involved in renovations needs careful consideration.
Paying for renovations: understanding renovation loans
Renovation loans come in two main types: structural change loans and non-structural change loans. Both serve the purpose of financing upgrades, remodelling, or repairs to residential properties.
Types of home renovations
Non-structural renovations are changes that are generally more cosmetic in nature. They could include almost anything that does not affect the structural components of the house. For example, you can change windows, doors, flooring, cabinetry, do house maintenance and repair, such as replacing weatherboards or deck repairs, add decks less than 1.5 off the ground or close in an existing veranda or patio.
Whereas structural renovations involve significant modifications, such as extending a bedroom or adding a bathroom; anything that involves load-bearing walls and requires council consent, Code Compliance Certificate (CCC), or valuations, for example.
If you are planning extensive changes, i.e., structural changes, then paying for renovations with a home loan would probably be more suitable than a renovation loan. If you already have a home loan, you can ask your bank about a home loan ‘top-up’. Once approved, you can access a specific amount of money for your structural changes i.e., an extension, a new wall etc.
Renovation loan amounts
Loans for renovations are typically for non-structural changes. The amounts are limited and vary from bank to bank. However, they usually have a cap of around $50,000. It can be a good idea to compare lenders to secure favourable interest rates.
The amount you can borrow depends on your income and credit history. Renovation loans are not typically secured against your home: they operate in a similar way to personal loans.
Repaying a non-structural renovation loan involves making fixed repayments over an agreed period: home renovation loans usually have a maximum repayment term of five years.
Evaluating the return on your renovation investment
Undertaking a home renovation involves a significant financial commitment, so assessing the return on investment (ROI) is essential. Some renovations, such as decks can substantially increase your property’s value, providing leverage when selling. Other changes may enhance safety and liveability.
Before you apply for any type of renovation loan, be it structural or non-structural, we can help you calculate the total cost of your project. Working with professionals, such as DBS Residential, ensures accurate cost estimation, including factors like consents and permits. We can meticulously calculate all costs, so you’ll avoid any surprises. Being aware of these from the beginning can prevent budget overruns.
Angels tread where …
Rushing in might be tempting, but thorough research will minimise unexpected financial challenges when paying for renovations. Knowing your property’s worth by comparing your home’s value to others in your neighbourhood, you can avoid over-capitalising on your property. You also need to clearly define the purpose of your renovation: is it for personal enjoyment, increasing resale value, or creating your forever home? This clarity will help you set your budget.
Home renovations in Auckland can be very rewarding when approached with careful financial planning. By understanding renovation loan options, evaluating the ROI of your project, and working with trusted builders, you’ll be well-equipped to breathe new life into your home. So, reach out to DBS Residential to discuss your renovation options.
Whether you’re planning a bathroom renovation, a kitchen revamp or a full inside-out makeover of your property, the DBS Residential building team can help.
We can build from your plans, or we can introduce you to one of our design experts. We bring together specialists from several different fields to give you a seamless, start-to-finish renovation service.
Don’t hesitate to contact DBS Residential on 09-884 0919 or send an email. Our expert team is ready to work with you to work out how much your renovations will cost. Based on the North Shore, we carry out home renovations as far north as Orewa, in the central Auckland suburbs, South Auckland and through West Auckland out to Kumeu.
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