ONE of the first considerations for anyone investing in property, whether it is their first house or creating their dream home, is the choice between buying, building or renovating. All three have advantages and disadvantages that can depend on your budget, what homes are available in your area, your time frames and overall lifestyle needs, however the first step for anyone is to ensure that they have the right type of loan to suit their financial situation.
Unless you are selling existing property, most people require a loan for property purchases. When looking at loans the main choices you make are between principal and interest or interest only loans, and fixed versus variable interest rates.
Fixed rates mean you know what your repayments will be, making budgeting easier. Most fixed loans allow limited extra repayments, don't have redraw facilities and may charge fees if you pay the loan out early. Variable rates are generally lower than fixed but do fluctuate, so you while you can benefit from low interest rates they can also increase. While budgeting can be harder they generally provide redraw facilities and allow voluntary payments, allowing you to pay your loan off faster.
The most popular of the two types of loans available is a principal and interest home loan which requires you to pay off the principal loan amount and interest repayments and are designed to be repaid in full over the life of the loan.
An interest only home loan differs as you only have to make payments on the interest of the loan for a period of time and not repay the principal amount. Interest only loans normally have a maximum period of five years, after which the loan reverts to principal and interest repayments.
Buying an existing home can be the most straight forward way to get your own home, especially for first home buyers looking to break into the market. The costs are comparatively lower and the purchase process can be much simpler. A newer home will be ready for you to live in straight away and while it is tempting to buy a house that was recently built, an older house can be more affordable. Small changes can be easily made when you move in, allowing you to plan any large future improvements.
Take into account your current and future needs, such as starting a family or working from home, inspect as many homes as possible to ensure you are happy with all aspects including size, layout and proximity to services such as transport, schools and shopping centres. It can be hard to remember individual homes so don't forget to take photos and notes during inspections, compare your favourites, and bring a list of any questions you have for the real estate agent.
Building your own home can be the best way to get exactly what you want and options range from buying off the plan to having your home architecturally designed. The average home takes between four to nine months to build, once the land is purchased and design locked in. When building there a wide range of decisions and costs involved apart from purchasing land and building your home. Aside from choosing your design and location, you need to ensure you understand all contracts and are aware of costs associated with building.
These can include site preparation, variations to designs and extra features not normally included such as additional rooms, more expensive materials and possible delays. Management of time and budget is vital when building. Keeping track of your finances will allow you to make any urgent decisions comfortably, while a good builder should keep you up to date with how work is progressing.
Building a home can be a daunting experience, however the aim is to make it as simple as possible, whilst still paying attention to details. You can start from scratch when building however by viewing a display home, you can get a much better feel for what you want. It gives you a sense of space and layout, while allowing you to interact with the home by feeling flooring surfaces, using appliances, playing with tap ware and cupboards, and by experiencing any in-built technology. You can simply use the design of the display home if you wish or you are able to make alterations to suit your needs.
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Renovating your property is a great way to give your new house a personal touch or to revamp your existing home. If you are thinking of renovating it is important to figure those costs in when purchasing a property. If you are going to make improvements straight away then you will be looking at a property with a lower purchase price. If you are renovating at a later date then you can afford to purchase a home at a higher value and continue saving towards any changes you want to make.
It's important that you take the time to plan your renovations before you start. That way you can order services and materials well in advance. If you are just purchasing a property, ask for a longer settlement date so you have some time up your sleeve to plan.
No matter when you decide to renovate it's vital to figure out a budget and stick to it. Renovations will not only make your home more comfortable and user-friendly for your needs, they will also add value to your home. When contemplating renovations for value-adding it is important to be careful of overspending as it can limit any financial gains. The general rule of thumb is to spend no more than five to ten per cent of the total value of the property on renovations. If you are new to renovations it is best to start small.
The kitchen and bathroom are the two most frequently renovated rooms, however they can also be the most difficult and often the most expensive and time consuming. Try renovating a bedroom or outdoor area first if it is your first attempt, and as you grow more confident you can move on to the trickier projects. The more work you can do yourself when renovating, the better it is for your budget. There is also a great deal of satisfaction to be had when you can stand back and look at a beautiful room that you have created yourself.