Renovation needs contingency fund.(and other renovation tips).
In light of the news of a 10% rise in property prices across London in the past month alone, it comes as no surprise that there has been a sharp increase in people choosing to renovate - instead of attempting to climb the property ladder. There are many things to take into account when renovating a property and this article should highlight some of the potential pitfalls.
1. Contingency Funds
Many people will pride themselves in their abilities to create a fool-proof budget for renovations, taking into account every possibility, and they will then push forward with the work, only to end up using a half-finished kitchen for a year or so. It is possible that, while renovating a bathroom, you will discover that rotten floorboards beneath carpet need to be replaced, for example. There are so many unknowables that, when taking into account the fact that it will be harder to add to any existing loan later on, you should aim for 20% contingency on larger projects. Ie, if the estimates are £50,000, your contingency should be £10,000. For small jobs it could be 10-15 % and for work on particularly old homes it could be as much as 30%.
Raising money for this contingency fund is probably cheapest as a part of a mortgage but if the amount is between £7,000-25,000 then a personal loan might be easier. For anything below £7,000 a credit card could work as there are now many that offer 0% on balance transfers. If you can’t pay it off in the 0% time, then take out a separate loan.
2. Consider moving out to avoid stress
Living somewhere else while renovation is underway isn’t necessarily a bad idea. This is likely to create an extra expense but sometimes the reduction in stress, and being forced to let the builders get on with their job, can amount to the whole affair running smoothly. If only part of your property is being renovated, but your whole family can no longer remain on site, then it may be possible to rent out the now vacant part of the property through a services like Rentify. This could help fund the time away, which in turn will keep and children or pets out of danger.
3. Don’t compromise on the basics
Sometimes people prioritise converting their loft before replacing a leaking boiler or sorting out any damp problems they might have in their house. This is always an error. The house’s utilities are expensive but there is no point in building a £10,000 bathroom if it is just going to get flooded within the next six months. The resale value of the property will be affected more drastically by utility problems like faulty wiring than it will be by out of date décor. No one is going to live in a house where half the lights don’t work, no matter how cool it looks. Fixing these kinds of issues should always be the first priority on any renovation.
4. Try green renovations
There are green loans available that can be used to provide insulation for your homes, double glazing or boilers. These can be paid back over long periods of time and are simply paid off through your electricity bill, which should be lower as a result of the modifications. The ‘Golden Rule’ is that the repayments should never exceed the payments you make on your energy bills.
5. If you’re planning on selling the property on day…
Don’t have the place renovated in accordance with your crazy tastes. Most people will have some idea of a dream home, and it is probably something unique that might alienate a lot of potential buyers one day. Of course you have to make a home you want to live in, but thinking about the day you will eventually sell the place has to be a part of any renovation. After all, most houses will outlive their occupants.