The Successful Renovation Guide

2. The Successful Renovation Guide | www.mortgagehouse.com.au

Renovations at a glance Refresh, reinvigorate, repair, restore and revive — it’s all at the heart of a renovation!

Generally speaking, a home renovation involves improving an existing property, and can vary from a complete transformation to a series of small jobs, all in an effort to enhance a living space, promote functionality and create aesthetic appeal. It’s a case of ‘out with the old and in with the new’.

Primetime television and social media are an endless source of renovation ideas. Inspired by what you may see on the screen and the allure of your current location, it’s common to want to stay put and renovate. But all is not what it seems in the hour-long TV show or the interior design magazines. Renovations come in all shapes

and sizes, determined by budget, purpose and personal style, and there are many things to consider before starting down the renovation road.

This guide will reveal the many benefits of a renovation, and how your goals can determine the type of renovation you undertake. It also aims to answer all your renovation questions, including:

• When is the right time to renovate?

• How long does it take?

• What will it cost you?

• How can you fund your dream plans?

3. The Successful Renovation Guide | www.mortgagehouse.com.au

RENOVATIONS AT A GLANCE ...................................................................................................... 02

THE MANY REASONS FOR RENOVATING..............................................................04

Home sweet home ...................................................................................................................05

Return on investment ...............................................................................................................06

Types of renovation ..................................................................................................................07

THE BENEFITS OF PROPERTY RENOVATIONS ....................................................08

What you can enjoy by renovating .........................................................................................09

WHAT TO CONSIDER BEFORE A RENOVATION ..................................................10

8 questions to consider before planning your renovation project .................................11

What could damage your borrowing power? .....................................................................12

Who should you include on your team? ..............................................................................13

Is renovating right for you? ......................................................................................................14

PLANNING YOUR RENOVATION TIMELINE ..........................................................15

It’s all about careful planning ...................................................................................................16

The renovation timeline ...........................................................................................................16

Likely timeframes ......................................................................................................................17

When is it the “right time” to renovate? ...............................................................................18

HOW TO REDUCE COSTS ............................................................................................19

5 ways to stretch your budget ...............................................................................................20

Watch out for overcapitalisation ............................................................................................21

Sometimes it’s best left to the professionals........................................................................21

HOW TO FUND YOUR RENOVATION PROJECT ..................................................22

5 ways to finance your renovation ........................................................................................23

How to unlock equity ..............................................................................................................24

RENOVATION VS CONSTRUCTION .........................................................................25

Larger projects may require a construction loan .................................................................26

Benefits of drawdown payments .........................................................................................26

WHY MORTGAGE HOUSE? ............................................................................................................ 27

Contents

Debt Consolidation ExplainedThe many reasons for renovating

The Successful Renovation Guide | www.mortgagehouse.com.au5.

THE

MAN

Y RE

ASO

NS

FO

R RE

NO

VATI

NG

TH

E BE

NEF

ITS

OF

PR

OPE

RTY

REN

OVA

TIO

NS

WH

AT T

O C

ON

SID

ER

BEFO

RE A

REN

OVA

TIO

NPL

ANN

ING

YO

UR

REN

OVA

TIO

N T

IMEL

INE

HO

W T

O R

EDU

CE C

OST

SH

OW

TO

FU

ND

YO

UR

REN

OVA

TIO

N P

ROJE

CTRE

NO

VATI

ON

VS

CON

STRU

CTIO

NW

HY

MO

RTG

AGE

HO

USE

?

Home sweet home Whether it’s to fix an unavoidable problem, to add your own touch, or to upgrade your home to suit you and/or your family better, there are many reasons for renovating your home.

When you take on a renovation to upgrade your own home, you can reap the rewards of accomplishing the task, satisfied and confident that you’ll benefit from years of enjoyment and/or improved comfort and/or luxury. A properly executed renovation can increase your property value should you decide to sell it later on down the line.

Home ImprovementsYour standard of living can be improved dramatically with practical planning, stylish designs and eco-friendly modifications. While glossy magazines and alluring social media accounts will no doubt create boundless inspiration, there are questions to ask prior to starting your remodelling plans: Are they practical? Will the designs from other homes suit yours? Will you continue to love them in 5 or 10 years?

Family-friendly upgradesIf your property needs updating to reflect your new/changing needs, you may want to think about a renovation. Maybe you’re starting a family and need to make the house suitable for children, your family needs a bigger bathroom to handle chaotic mornings, or you want to transform your empty nest into something a little more sophisticated. Whatever your reasons are for an upgrade, a renovation can modify your house to suit your current needs without you having to move away from dear friends, good schools or workplaces.

Immediate repairs and routine maintenance Eliminating problems before they arise is the best way to avoid them possibly costing you more in the long-run. Fixing a leaky roof, replacing broken air conditioning, repairing an old outside deck before it starts rotting, or many other repairs can improve your everyday wellbeing. Of course, issues could still come to light down the road, but fixing a problem before it gets worse is the most cost-effective way to keep your home and finances under control.

The many reasons for renovating

Tip Pick styles that are likely to stand the test of time - designing your home to meet fast fashion cycles can be costly!

Tip Consider what may occur in the near future before you start renovating. If you’re thinking about getting a pet in the next few years, you may need to consider updating your outside area(s). If you want to start a family, thinking child-friendly when it comes to interior areas could save you money!

Tip Fix the irritating ‘characteristics’ of your property before they turn into possibly expensive and disruptive repairs down the line. If you decide to sell without these problems properly addressed, you may get a price lower than what the repair would have cost.

The renovations you make will depend largely on why you plan to transform your home. Before you start, it’s crucial to plan what you hope to get from renovating, whether you’re aiming for a more significant rental yield from your investment property, or wanting to put your stamp on your home while adding value to the property.

The Successful Renovation Guide | www.mortgagehouse.com.au6.

THE

MAN

Y RE

ASO

NS

FO

R RE

NO

VATI

NG

TH

E BE

NEF

ITS

OF

PR

OPE

RTY

REN

OVA

TIO

NS

WH

AT T

O C

ON

SID

ER

BEFO

RE A

REN

OVA

TIO

NPL

ANN

ING

YO

UR

REN

OVA

TIO

N T

IMEL

INE

HO

W T

O R

EDU

CE C

OST

SH

OW

TO

FU

ND

YO

UR

REN

OVA

TIO

N P

ROJE

CTRE

NO

VATI

ON

VS

CON

STRU

CTIO

NW

HY

MO

RTG

AGE

HO

USE

?

Return on investment If you own an investment property, you will likely fall into one of the following categories:

Investing for rental yield - renting your property out to tenants as a source of income

Investing for capital growth - keeping hold of the property and selling at the right time with the aim of generating a lump sum of profit

No matter the category your property investment strategy fits into, a renovation could help you increase your return on investment.

Rental yieldIt’s no secret that a clean, modern property in good working order can charge more for rent than one with a dated interior and old appliances. Not only will a renovated property appeal to prospective tenants, but it shows you’re willing to make improvements to ensure tenant safety and comfort, therefore increasing your chance of attracting and retaining better quality and longer-term tenants.

Example: Jane buys an investment property to rent out for an additional regular income*.

Property cost: $600,000 Pre-renovation weekly rental income: $600 Pre-renovation yearly rental income: $31,200

After researching the rental yield of other investment properties in the area, she spends $18,000 to renovate the main rooms and appliances, creating a modern and stylish home for her target market. It takes just under a month to complete all renovations and she puts her property back up to let at a higher value.

Post-renovation weekly rental income: $825 Post-renovation yearly rental income: $42,900

Rental loss of 1 month = $600 Renovation cost = $18,000 Total = $18,600

Difference of higher rent: $825-$600= $225/week Time to get ‘payback’ on the renovation = $18,600/$225=83 weeks

In 18 months, Jane makes her money back on renovation costs, and her investment property can continue to be rented out at the higher cost, providing a higher return on interest for years to come.

*This fictional scenario is an example created to highlight the value a renovation can have on a rental yield.

Capital growthInvesting in a property for capital growth is all about the profit you hope to make when you come to sell. The aim is to get as many people interested in the property as possible to increase the property value. Giving the walls a lick of paint, replacing outdated fixtures or a faded carpet, and making minor repairs can often do wonders for increasing property value and the likelihood of selling your property at a higher price than the cost of the renovation.

Tip When it comes to rental properties, the quicker you make renovations, the better. While small fixes here and there shouldn’t bother your tenants, it’s far more expensive to have a vacant property when more substantial renovation work is required. You’ll need to factor in the loss of rental income as well as the actual renovation costs during your renovation.

Tip Ensure the improvements are made to appeal to a large market, and not your personal tastes. Kerbside appeal is key to get prospective buyers through the door, and the kitchen and bathrooms can immediately increase value. When you’re renovating to sell, it’s best to do your research to avoid overspending.

The Successful Renovation Guide | www.mortgagehouse.com.au7.

THE

MAN

Y RE

ASO

NS

FO

R RE

NO

VATI

NG

TH

E BE

NEF

ITS

OF

PR

OPE

RTY

REN

OVA

TIO

NS

WH

AT T

O C

ON

SID

ER

BEFO

RE A

REN

OVA

TIO

NPL

ANN

ING

YO

UR

REN

OVA

TIO

N T

IMEL

INE

HO

W T

O R

EDU

CE C

OST

SH

OW

TO

FU

ND

YO

UR

REN

OVA

TIO

N P

ROJE

CTRE

NO

VATI

ON

VS

CON

STRU

CTIO

NW

HY

MO

RTG

AGE

HO

USE

?

Types of renovation Renovations vary widely in shape and size. They can range from small repairs and quick fixes to entire home remodels. The time and cost of your renovation will depend on the scale you want to transform or upgrade your property.

Medium renovationsMedium-sized renovation jobs require a little more planning and outlay. You may need multiple tradespeople or consultants on board, and your project could take anything from a few days to a few weeks.

Examples of medium-sized projects include larger painting and decorating projects, garden landscaping, tiling a bathroom, building a pool, installing new fixtures and facilities, or installing flooring or lighting throughout the property.

Mini makeoversSimple improvements can add appeal with relatively little cost and planning and can be completed in a short space of time. These renovations will typically update smaller elements around the house and can be done in a few hours or a couple of days.

Examples of mini makeovers include painting and decorating, changing outdated fixtures, recarpeting, replacing doors and/or landscaping a small garden or patio.

Total transformationsMore complex projects can be costly, taking months and sometimes even years to finish, and requiring a team of professionals to complete the job. These projects are often multi-faceted, comprising of multiple room renovations to create an entire property transformation, including bathroom or kitchen remodels, hardwood flooring installations, driveway extensions and more.

Structural changes and extensions are the foundation of the biggest renovation projects, and these large-scale home improvements can often be financed with specially-created construction loans, the benefits of which are explained later on in this guide.

Tip When it comes to something as important as your home or investment property, put your money in good hands by hiring contractors and specialists to do the job for you.

The benefits of property renovations

The Successful Renovation Guide | www.mortgagehouse.com.au9.

THE

MAN

Y RE

ASO

NS

FO

R RE

NO

VATI

NG

TH

E BE

NEF

ITS

OF

PR

OPE

RTY

REN

OVA

TIO

NS

WH

AT T

O C

ON

SID

ER

BEFO

RE A

REN

OVA

TIO

NPL

ANN

ING

YO

UR

REN

OVA

TIO

N T

IMEL

INE

HO

W T

O R

EDU

CE C

OST

SH

OW

TO

FU

ND

YO

UR

REN

OVA

TIO

N P

ROJE

CTRE

NO

VATI

ON

VS

CON

STRU

CTIO

NW

HY

MO

RTG

AGE

HO

USE

?

What you can enjoy by renovatingRenovations can be well worth the effort, time and money you put in. Some benefits include:

Location, location, locationLocation is key. Whether you’re close to the coast, local to amenities or a close support network, you may not want to part with where you live. When you renovate, you can upgrade your home while not compromising on your neighbourhood.

Avoiding potential future costsBy addressing what needs to be done before you start renovating, you can avoid potential problems and costs down the line. A professional maintenance check can highlight any issues you can choose to fix before or during your renovation before the problem escalates.

Restoring authenticity to an older homeAuthentic period features in great condition are rare and often highly sought after. By restoring an older home to its original look and feel while adding practical elements like a 21st-century kitchen and bathroom, you can enjoy a character-filled home with the aim of also increasing the property’s value.

Saving on moving costsWhen planning to move home, many don’t consider moving costs such as stamp duty and removals. By choosing to renovate, you can say goodbye to any moving costs, while enjoying a fresh lease on life for your home!

Increasing property valueIf you’re looking to increase the value of your property, the right renovation may be just the trick. Kitchens, bathrooms and street appeal are all up there as the best spaces to renovate to up the value and attract potential buyers or tenants.

Reducing your carbon-footprint Making sustainable renovations can be good for your bank balance while reducing your environmental footprint. Installing a rainwater tank can cut your water consumption, new insulation can reduce heating costs in winter and air conditioning in the summer, and you may be able to save money upfront by reusing building materials.

Making a house a homeWhether you’re making changes to accommodate a growing family, or you want to remove the previous owner's style, you can make your house your own with any level of renovation. Often, putting your own touch on a property is the difference between a house and a home.

What to consider before a renovation

The Successful Renovation Guide | www.mortgagehouse.com.au11.

THE

MAN

Y RE

ASO

NS

FO

R RE

NO

VATI

NG

TH

E BE

NEF

ITS

OF

PR

OPE

RTY

REN

OVA

TIO

NS

WH

AT T

O C

ON

SID

ER

BEFO

RE A

REN

OVA

TIO

NPL

ANN

ING

YO

UR

REN

OVA

TIO

N T

IMEL

INE

HO

W T

O R

EDU

CE C

OST

SH

OW

TO

FU

ND

YO

UR

REN

OVA

TIO

N P

ROJE

CTRE

NO

VATI

ON

VS

CON

STRU

CTIO

NW

HY

MO

RTG

AGE

HO

USE

?

8 questions to consider before planning your renovation projectWhile it’s easy to get caught up in the whirlwind of starting your renovation project, it’s vital to answer the following questions beforehand. Planning is your best friend during home improvements, and it’s important to have a clear idea of what you want and need from the process to make the journey worthwhile.

What are you hoping to achieve?Plan clearly what you want and need from your renovations, and make sure every step of your renovation aims to achieve all of your goals.

1

Is your budget sufficient to cover planned costs plus any surprises? Research, research, research. You should have a defined budget that caters for the work you are planning, as well as a bucket set aside for any costly surprises that may occur mid-renovation.

3

Should you upgrade in one go or phase your renovation into chunks of work?If you want or need to start your home improvements immediately, but you don’t have the funds to finance a large chunk of work, you could undertake the work in stages. It’s important to recognise that, as with anything bought in bulk, getting your renovations done in one go is likely to save you money.

Staging your renovations can easily be done by applying for one of our competitive low rate loans with a 100% Offset Account. We can show you how to use this interest-saving feature to your advantage during the loan application process.

5

What are your priorities when renovating?Where possible, it’s better to get all your top priorities done first, so if costs go over budget, you can compromise on less important tasks. Make sure you make your priorities known to any professionals you hire.

4

Have you factored in potential higher repayments? When cashing out equity from your home, you need to consider how your finances will fare when making higher repayments. Most lenders will not approve loans that incur a risk of not being paid back. Whether you are eligible to take on higher repayments for renovation work will be assessed in your application process.

6

Have you considered all the costs that may arise during the renovation? Make sure you budget for all potential costs that may come about during or after your renovation work. Some costs can be planned for, like registering your property to include GST in the sale price if you are making substantial renovations for profit, while others, like finding separate issues mid-renovation, come as more of a surprise.

2

The Successful Renovation Guide | www.mortgagehouse.com.au12.

THE

MAN

Y RE

ASO

NS

FO

R RE

NO

VATI

NG

TH

E BE

NEF

ITS

OF

PR

OPE

RTY

REN

OVA

TIO

NS

WH

AT T

O C

ON

SID

ER

BEFO

RE A

REN

OVA

TIO

NPL

ANN

ING

YO

UR

REN

OVA

TIO

N T

IMEL

INE

HO

W T

O R

EDU

CE C

OST

SH

OW

TO

FU

ND

YO

UR

REN

OVA

TIO

N P

ROJE

CTRE

NO

VATI

ON

VS

CON

STRU

CTIO

NW

HY

MO

RTG

AGE

HO

USE

?

What could damage your borrowing power?There are various things which may affect your borrowing power when it comes to taking out a loan.

Example 1: Jane took out a loan of $500,000 on a property 10 years ago and has now paid off $350,000.

The property value rose dramatically since Jane purchased it. It’s now worth $1million, so she has $850,000 in equity she’d like to use to renovate her home.

Taking into consideration the loan to value ratio of 20%, it’s $200,000 on a $1million property. That means Jane has $650,000 in available equity. She chooses to take out $50,000 to cover a kitchen and bathroom renovation, and her loan balance will increase from $150,000 to $200,000 which will increase her repayments.

*This fictional scenario is an example created to highlight the value a renovation can have on a rental yield.

LVR (Loan to Value Ratio)If you have been paying off your mortgage for a while, or your property has risen dramatically in value, then you may have enough equity to take out a considerable sum to use for home renovations.

If you plan to refinance to unlock equity from your home, you will need to ensure you have enough to cover your project costs. In order to avoid paying Lenders Mortgage Insurance (LMI), you are required to have a 20% LVR in your property.

Credit scoreA bad credit rating can decrease financial opportunities such as applying for a personal loan or unlocking equity in your home loan to fund your renovation plans. In contrast, the better your credit score, the better the deals you may be able to unlock! There are ways to improve your credit rating, so speak to us to formulate a plan if you are unsure.

Ability to meet repaymentsYour ability to meet repayments is crucial when taking out a loan, and the same applies when you are cashing out equity. Releasing equity will increase monthly repayments, creating a greater risk of defaulting on your loan. Lenders have a responsibility not to loan money to those who are unable to make the required minimum repayments, regardless of how much equity you have in your property.

Repair vs improvement - are you aware of the tax benefits for investors? The upkeep of your investment property is split into three categories: repairs, maintenance and improvements. Restoring something to its original state or function may be fully tax deductible, maintenance could be claimed in the current tax year, while making improvements is handled differently.

7

Should you renovate or move home? By taking the current value of your home and adding stamp duty plus what you realistically expect to spend on your renovations, you can find the rough price of a home that you could move to. There are pros and cons for moving and renovating, but with a clearer picture of both, you can make a more informed decision.

8

The Successful Renovation Guide | www.mortgagehouse.com.au13.

THE

MAN

Y RE

ASO

NS

FO

R RE

NO

VATI

NG

TH

E BE

NEF

ITS

OF

PR

OPE

RTY

REN

OVA

TIO

NS

WH

AT T

O C

ON

SID

ER

BEFO

RE A

REN

OVA

TIO

NPL

ANN

ING

YO

UR

REN

OVA

TIO

N T

IMEL

INE

HO

W T

O R

EDU

CE C

OST

SH

OW

TO

FU

ND

YO

UR

REN

OVA

TIO

N P

ROJE

CTRE

NO

VATI

ON

VS

CON

STRU

CTIO

NW

HY

MO

RTG

AGE

HO

USE

?

Who should you include on your team? Depending on the project you’re undertaking and your budget, you may need a team of professionals to help execute your renovation plans.

Some smaller jobs can be done yourself, but the majority are best left to the pros. Though you may save money short-term, you run the risk of spending much more hiring professionals to redo any DIY work that hasn’t gone to plan!

The following professionals will be able to tackle various elements of your renovation. Some, like designer-builders, are skilled in multiple areas which may lower costs.

4 time-saving and cost-effective tips

Planning - interior designers, architects and contractors

Construction - builders

Specialist work - electricians, carpenters, plumbers, tilers, floor sanders, bricklayers

It’s recommended to get a few quotes to see if there are any huge differences in price point, though keep in mind that the cheapest solution is not always best. The balance between quality workmanship and a low price can be hard to determine before work is started. Getting it wrong can cost you dearly -either in upfront costs or through paying for rework.

1

Always check customer reviews and photographs of previous work to get a better idea of the professional’s experience, skill and customer satisfaction. For more peace of mind, you could call their references or view their work in person.

2

Take photos of progress, and not just to compare before and after! You can use specific photos to revise blueprint plans of structures, wiring, piping and drainage, and progress shots can be used for documentation as well as for legal and insurance reasons.

4

Get everything in writing. If anything comes up mid-project, your paperwork should be updated, signed and dated by both you and your contractors.3

The Successful Renovation Guide | www.mortgagehouse.com.au14.

THE

MAN

Y RE

ASO

NS

FO

R RE

NO

VATI

NG

TH

E BE

NEF

ITS

OF

PR

OPE

RTY

REN

OVA

TIO

NS

WH

AT T

O C

ON

SID

ER

BEFO

RE A

REN

OVA

TIO

NPL

ANN

ING

YO

UR

REN

OVA

TIO

N T

IMEL

INE

HO

W T

O R

EDU

CE C

OST

SH

OW

TO

FU

ND

YO

UR

REN

OVA

TIO

N P

ROJE

CTRE

NO

VATI

ON

VS

CON

STRU

CTIO

NW

HY

MO

RTG

AGE

HO

USE

?

Is renovating right for you?A successful renovation can improve your life and impact your wealth, but the amount of planning, effort and money involved may put you off.

Add instant flair with hanging artHang art or family photos on the wall to create instant character and style. You could even update frames and their placement for a fresh take on your current artwork.

Find fresh focal piecesJazz up each room and pull your home together by a common theme with colour-coordinated new cushions, vases, mirrors and plants.

Maximise space with your current furnitureYou can often transform the look of a room just by optimising the space and repositioning furniture.

Change little thingsInstantly style your home on a budget by changing old handles and knobs on kitchen cabinets, doors and drawers.

Some quick and budget-friendly alternatives to renovating include:

Planning your renovation timeline

The Successful Renovation Guide | www.mortgagehouse.com.au16.

THE

MAN

Y RE

ASO

NS

FO

R RE

NO

VATI

NG

TH

E BE

NEF

ITS

OF

PR

OPE

RTY

REN

OVA

TIO

NS

WH

AT T

O C

ON

SID

ER

BEFO

RE A

REN

OVA

TIO

NPL

ANN

ING

YO

UR

REN

OVA

TIO

N T

IMEL

INE

HO

W T

O R

EDU

CE C

OST

SH

OW

TO

FU

ND

YO

UR

REN

OVA

TIO

N P

ROJE

CTRE

NO

VATI

ON

VS

CON

STRU

CTIO

NW

HY

MO

RTG

AGE

HO

USE

?

It’s all about careful planning

It’s easy to underestimate the amount of planning that may be required to successfully execute your renovation plans, which means it’s important to be organised. Consideration should always be given to possible setbacks and delays.

Following these 5 simple steps will help your renovation project be completed on time and budget.

Planning and finalisingThe planning stage involves finalising your ideas and budgeting accordingly. At this stage, you can start drawing up sketches, look for the perfect kitchen units or call in an interior designer to help. An architect should be used for bigger renovations that involve structural changes that may require a construction loan to fund your project.

1-6 months prior to renovating, depending on the size of your project, you should begin pricing what you will need (while sticking to your budget!). Get quotes from multiple contractors, specialists, and any other tradespeople you require for your project. Finalise your renovation start and finish dates to ensure everyone working on the project commits to the timeline.

Once your funding has been approved, you can begin to order your chosen finishes. Make sure you take into account shipping times and costs if any products you wish to buy are handmade or coming from overseas. If you’ve got the space to store things away from the renovation zone, you could also plan to purchase any new appliances, fixtures, or decor.

InstallationOnce your demolition of walls or removal of furniture and other items are taken care of, installation of any new appliances or non-supporting walls can commence. A bigger project can often involve multiple tradespeople performing different tasks, so you need to account for this in your budget.

It’s all in the research6-12 months prior to renovating, make a moodboard with all your various inspirations and refine it until it forms the base of your renovation plans. On average this may take anywhere from a couple of days to several weeks to collate and narrow down your inspiration, depending on the scale of your project.

1

2

4

Demolition or removalThe demolition or removal phase can be quite a quick process, a couple of days for a kitchen or bathroom. An essential first step when excavating is to ‘dial before you dig’, which aims to prevent damage to infrastructure, such as water pipes.

Final touchesAfter installations are complete, the final touches can be made. In a kitchen, this may include connecting electrical fixtures, or in a bathroom, this stage may simply involve waiting for waterproofed areas to dry before you start to decorate. The final stage of your renovation will usually consist of decorating and arranging furniture and accessories.

3

5

The renovation timeline

The Successful Renovation Guide | www.mortgagehouse.com.au17.

THE

MAN

Y RE

ASO

NS

FO

R RE

NO

VATI

NG

TH

E BE

NEF

ITS

OF

PR

OPE

RTY

REN

OVA

TIO

NS

WH

AT T

O C

ON

SID

ER

BEFO

RE A

REN

OVA

TIO

NPL

ANN

ING

YO

UR

REN

OVA

TIO

N T

IMEL

INE

HO

W T

O R

EDU

CE C

OST

SH

OW

TO

FU

ND

YO

UR

REN

OVA

TIO

N P

ROJE

CTRE

NO

VATI

ON

VS

CON

STRU

CTIO

NW

HY

MO

RTG

AGE

HO

USE

?

Likely timeframesBelow are a list of common renovation projects and their likely timeframe:

Kitchen renovation: 3 - 8 weeks

Bathroom renovation: 4 - 5 weeks

Repainting interior: allow approximately 4-6 hours/room x 2 coats

Installation of floating flooring: 1 - 4 days depending on the size of your property

Installation of hardwood flooring: 5 - 15 days depending on the size of your property

Ceramic tiling: 4 hours - 4 days depending on size and pattern

Recarpeting: 1 - 2 days

Decking: 1 - 3 days depending on the size of the area and the materials used

Landscaping: 1 - 4 weeks depending on the labour intensivity, precision and size of the outdoor area

The Successful Renovation Guide | www.mortgagehouse.com.au18.

THE

MAN

Y RE

ASO

NS

FO

R RE

NO

VATI

NG

TH

E BE

NEF

ITS

OF

PR

OPE

RTY

REN

OVA

TIO

NS

WH

AT T

O C

ON

SID

ER

BEFO

RE A

REN

OVA

TIO

NPL

ANN

ING

YO

UR

REN

OVA

TIO

N T

IMEL

INE

HO

W T

O R

EDU

CE C

OST

SH

OW

TO

FU

ND

YO

UR

REN

OVA

TIO

N P

ROJE

CTRE

NO

VATI

ON

VS

CON

STRU

CTIO

NW

HY

MO

RTG

AGE

HO

USE

?

When is the “right time” to renovate? There are many things to consider when deciding on the most appropriate time to start renovating, whether you’re upgrading your home or investment property.

Prioritise repair work before it costs you in futureRenovations to repair damage should take place as soon as possible. Remedial work, if not completed swiftly, can often lead to more problems. For example, if a leaking roof isn’t fixed as soon as possible it may lead to extensive water damage and costly repair work.

Off-peak savings If you’re looking to renovate to sell for a profit, you will likely want your renovations to be cost-efficient. Timing renovation work during off-peak times for builders and tradespeople may reduce the cost of renovations. There may also be a wider array of businesses and professionals to choose from.

Ensure renovations are complete before tenants move inIf you are renovating to maximise your rental income, then you may want the project completed before your tenants move in or timed to start at the end of your current lease. You will want to choose a time when the work can be completed quickly, as the longer the renovation work takes place, the more rental income you lose.

Renovate before you move inPurchasing a low-priced property with the intention to renovate can be desirable. If you account for renovation costs in your overall purchase budget, renovations can take place before you move in. A vacant property can mean renovations take place quickly and efficiently.

Wait to build equity Some renovations, such as making fashion-forward cosmetic alterations or bringing an old-fashioned home into the 21st century, may not be overly time-sensitive. If your renovation dreams aren’t immediately essential, instead of taking out a higher-rate personal loan or improving your home on a tight budget and draining your savings, you may want to wait until your home builds enough equity that you can cash out to fund your remodelling plans.

Plan aheadIf you’re looking to sell your renovated property, it is advised to research the best time of the year to sell. In many parts of Australia, it’s common for property to be put up for sale around Spring. Completing work just before you’re ready to sell will avoid wear and tear and ensures the renovation work is still fresh. It’s important to account for potential delays so you don’t miss out on the peak selling season.

How to reduce costs

20. The Successful Renovation Guide | www.mortgagehouse.com.au

THE

MAN

Y RE

ASO

NS

FO

R RE

NO

VATI

NG

TH

E BE

NEF

ITS

OF

PR

OPE

RTY

REN

OVA

TIO

NS

WH

AT T

O C

ON

SID

ER

BEFO

RE A

REN

OVA

TIO

NPL

ANN

ING

YO

UR

REN

OVA

TIO

N T

IMEL

INE

HO

W T

O R

EDU

CE C

OST

SH

OW

TO

FU

ND

YO

UR

REN

OVA

TIO

N P

ROJE

CTRE

NO

VATI

ON

VS

CON

STRU

CTIO

NW

HY

MO

RTG

AGE

HO

USE

?

Renovations may stretch from small, quick fixes to big transformations requiring professional help and months of work.

Ultimately, you decide how much your renovations will cost - you can make your remodelling plans as cost-efficient or as luxurious as your budget allows. When sticking to a strict budget, factor in ways to keep the budget down where you can, and where you can afford to splash out a little.

Don’t let unwanted costs surprise you!

It’s crucial to plan for potential costs that may arise, and it’s commonly recommended to put aside 10-15% of your estimate project costs to address the unexpected.

Choose cost-effective optionsSome purchases shouldn’t be skimped on, such as insulation or air conditioning, but there are other ways to stick to the budget. Choosing standard measurements or finishing options instead of having things custom-made can reduce costs dramatically.

Shop aroundIt’s important to get at least three quotes from contractors to ensure you’re getting a good deal, though you should also be looking at the quality of past projects, experience in the trade and testimonials from previous customers as contributing factors in your decision-making.

Plan to answer the problem firstA modest budget needs to solve the most immediate reason you’re renovating. Create a spending plan that answers any problems or reasons for renovating you find most important and stick to it! Any money left over can be used to add finishing touches or go back into your savings.

Hunt for bargainsYou may have connections in the trade that can give you a friend and family discount, but there are plenty of other ways to save. You could ask your builder who their regular suppliers are to see if you could use their trade discounts. When it comes to buying on sale or from discount warehouses, beware - often a sale means the product won’t be coming back into stock, so it may be hard to get it again should you need to.

1

2

3

4

DIYWhen it comes to the smaller parts of your renovation, you may be able to easily do these yourself. It all comes down to your skills, the time you can set aside, and your budget. It’s important to know when to bring in the professionals, as mistakes could be costly.

5

5 ways to stretch your budget

21. The Successful Renovation Guide | www.mortgagehouse.com.au

THE

MAN

Y RE

ASO

NS

FO

R RE

NO

VATI

NG

TH

E BE

NEF

ITS

OF

PR

OPE

RTY

REN

OVA

TIO

NS

WH

AT T

O C

ON

SID

ER

BEFO

RE A

REN

OVA

TIO

NPL

ANN

ING

YO

UR

REN

OVA

TIO

N T

IMEL

INE

HO

W T

O R

EDU

CE C

OST

SH

OW

TO

FU

ND

YO

UR

REN

OVA

TIO

N P

ROJE

CTRE

NO

VATI

ON

VS

CON

STRU

CTIO

NW

HY

MO

RTG

AGE

HO

USE

?

Watch out for overcapitalisationSomething to carefully consider when you plan to renovate is overcapitalisation. This is where you spend more on renovating a property than the premium you can sell it for after the renovation. It’s advised you shouldn’t spend more than 5% of the expected selling price (or valuation), so you should keep the following in mind:

The price you paid for the property

The price the property is currently valued at

Your renovation budget and expected costs

Sometimes it’s best left to the professionals It’s common to think that it’s best to DIY smaller projects, and while you may be familiar with a tool kit and power drills, sometimes it pays to get it done right the first time. DIY jobs may save you money up front, but when it comes to durability and quality, not to mention the time spent tackling the job at hand, you could end up more out of pocket than if you were to get the professionals in..

What you should expect from hiring a professional: • A smoother project with clearly defined timelines and costs

• Peace of mind that the job will be done to the correct standards, with a good-looking result

• Warrantied work should there be any issues

• A full service from prep to cleaning up

How to fund your renovation project

23.

THE

MAN

Y RE

ASO

NS

FO

R RE

NO

VATI

NG

TH

E BE

NEF

ITS

OF

PR

OPE

RTY

REN

OVA

TIO

NS

WH

AT T

O C

ON

SID

ER

BEFO

RE A

REN

OVA

TIO

NPL

ANN

ING

YO

UR

REN

OVA

TIO

N T

IMEL

INE

HO

W T

O R

EDU

CE C

OST

SH

OW

TO

FU

ND

YO

UR

REN

OVA

TIO

N P

ROJE

CTRE

NO

VATI

ON

VS

CON

STRU

CTIO

NW

HY

MO

RTG

AGE

HO

USE

?

The Successful Renovation Guide | www.mortgagehouse.com.au

5 ways to finance your renovation Now you have a better understanding of the benefits of renovating, the likely time frame and how much it might cost, you need to know how to fund the project.

Construction loan For bigger renovation projects that require structural changes to your property, you may need to take out a construction loan. We pay your builder in drawdowns, which means the builder gets paid at key stages of the build process, and you only pay interest on the work that has been completed.

Offset AccountYou could fund your renovation in stages by using a Mortgage House 100% Offset Account. Any money put into your Offset Account will act to offset the interest payable on the principal of your home loan, whilst you concentrate on renovating your property.

Staging your renovations can easily be done by applying for one of our competitive low-rate loans with a 100% Offset Account. We can show you how to use this interest-saving feature to your advantage.

Loan Top-upSimilar to unlocking equity, a loan top-up is applicable for current Mortgage House customers who want to increase the size of their loan to fund their renovation.

Unlocking equity The equity you have in your home is the difference between what you owe your lender and the value of your property. To unlock your equity and fund your renovation dreams, you will need to refinance your home loan. Not only will you get the money you need, but you could refinance to a better deal that may save you money and give you more financial flexibility on your future repayments.

Personal loan A personal loan can help when you need to spend more than your cash flow allows. You can apply, be approved and have the cash you need in under 24 hours.

24.

THE

MAN

Y RE

ASO

NS

FO

R RE

NO

VATI

NG

TH

E BE

NEF

ITS

OF

PR

OPE

RTY

REN

OVA

TIO

NS

WH

AT T

O C

ON

SID

ER

BEFO

RE A

REN

OVA

TIO

NPL

ANN

ING

YO

UR

REN

OVA

TIO

N T

IMEL

INE

HO

W T

O R

EDU

CE C

OST

SH

OW

TO

FU

ND

YO

UR

REN

OVA

TIO

N P

ROJE

CTRE

NO

VATI

ON

VS

CON

STRU

CTIO

NW

HY

MO

RTG

AGE

HO

USE

?

The Successful Renovation Guide | www.mortgagehouse.com.au

How to unlock equity To unlock your equity, you need to refinance your property. Not only will this get you the cash you need to renovate, but you could reap the rewards of switching to a better deal at the same time!

Follow our 4-step action plan After you apply online, follow our simple 4-step action plan to unlock your equity and start your renovation goals.

Obtain pre-approval for your refinanced loan and equity cash out

Commence your renovation project with Mortgage House financial backing

Your Lending Specialist will determine your borrowing power

Present your finalised renovation plans to us

1

2

3

4

Applying for a home loan just got easier! Applying to refinance your property doesn’t have to be a confusing or lengthy process. With our Apply Online portal, you can upload the information we need to our Lending Specialists in just 15 minutes. Forget drowning in endless forms - we just need the basic information to see how best we can help you with your home renovation plans.

Photo identification

Details of income

Two latest payslips

Details of expenses

Home loan application checklist

Bank statements for the previous three months

Details of assets

All loan statements (home, personal, car etc.) for the previous three months

Details on the home to be refinanced

Renovation vs construction

26. The Successful Renovation Guide | www.mortgagehouse.com.au

THE

MAN

Y RE

ASO

NS

FO

R RE

NO

VATI

NG

TH

E BE

NEF

ITS

OF

PR

OPE

RTY

REN

OVA

TIO

NS

WH

AT T

O C

ON

SID

ER

BEFO

RE A

REN

OVA

TIO

NPL

ANN

ING

YO

UR

REN

OVA

TIO

N T

IMEL

INE

HO

W T

O R

EDU

CE C

OST

SH

OW

TO

FU

ND

YO

UR

REN

OVA

TIO

N P

ROJE

CTRE

NO

VATI

ON

VS

CON

STRU

CTIO

NW

HY

MO

RTG

AGE

HO

USE

?

How is a construction loan different to a home loan?A construction loan is taken out using the same application process as obtaining a home loan. The difference happens once your loan is settled: instead of paying for the property in one lump sum, you pay your builder in what’s known as drawdowns or progress payments, as key stages of the project are completed. When the project reaches completion, your loan will automatically switch to a standard home loan, giving you all the money-saving features you need to retain financial flexibility, while paying off your new home or home addition.

You can learn more about the construction process with our free guide to construction loans, which you can find at mortgagehouse.com.au.

Larger projects may require a construction loanWhen it comes to funding your renovation, you may be surprised to learn that not all renovation plans can be financed through a personal loan or by unlocking equity.

A home improvement that restores something to a good state of repair is classed as a renovation, and improvements that involve any structural changes will probably require a construction loan.

Knocking down, building or restoring any structural walls, support beams or roofing, or adding an extension to the property will likely require a construction loan to fund the project, whereas a small kitchen redesign would most likely be a cash-out loan from your home equity.

Benefits of drawdown payments

Lower repaymentsWith lower interest rates comes greater cash flow, helping you out financially during the project build. This extra cash can be useful if you are renting elsewhere or can be used to start buying what you need to furnish the property once built!

Less interest When you only pay interest on the amount of the loan that you’ve paid, not the entire loan amount, your repayments will begin low and gradually increase as the project nears completion.

Protection Prior to construction, the key stages of the build - and release of the funds - will be agreed with your builder. As funds are not released until these key stages are completed, inspected and approved, this gives a further guarantee that each stage will be completed on time and to correct standards.

27. The Successful Renovation Guide | www.mortgagehouse.com.au

Why Mortgage House?We are a leading Australian non-bank lenderMortgage House is one of Australia’s most awarded Lenders. We’ve been in business since 1986 and we’ll be only too happy to share our industry experience with you.

We provide a number of unique mortgage solutions that the banks find hard to match. Our super-low interest rates and extensive range of loan options means there’s a loan suited to every person. With one-on-one support, our expert Lending Specialists will help find you a suitable loan option for your renovation needs.

Here’s why we’re the best choice for your renovation loan:• We don’t have to maintain an expensive nationwide branch network. Less overheads for us means competitive

low rates for you.

• We’re 100% digital and our Apply Online process is streamlined for prompt processing, so you won’t drown in a sea of paperwork.

• We’re big enough to offer you our own products. Unlike banks, we’re small enough to care about your needs.

Award WinningWe’re one of Australia’s most awarded non-bank

lenders

We've helped Aussies achieve homeownership

since 1986

Expert lenders who’ll get you there without the

mortgage jargon

Our innovative online services will save you

time & effort

Experienced Approachable Innovative

Fast-track your way into your dream home Get started and APPLY ONLINE within minutes.

Less paper work & waiting time

Complete the form in 15 minutes

Save & come back later

APPLY ONLINE

save@mortgagehouse.com.auapplyonline.mortgagehouse.com.au

Apply Online Today

BOOK A CALLBACK

INTELLECTUAL PROPERTY STATEMENT AND DISCLAIMER: The information presented is current at the time of printing and may change without notice at the sole discretion of © Mortgage House 2019. All logos, graphics, text and information is owned by, or licensed to: Mortgage House Pty Ltd ACN 129091 372 and is subject to copyright. Mortgage House Pty Ltd ACN 129 091 372 is a credit representative of Mortgage House of Australia Pty Ltd ACN 081 508 054 (Australian Credit License 393283).

APPLY ONLINE