Feb 25, 2004 - 09:00

Financing Home Improvements

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Improving your existing home is an alternative option to moving or upgrading.

If you are looking for more space, consider converting your attic, building an extension or conservatory as an alternative to making the big move. If you do decide to move later, your investment should pay dividends in the end. You might also consider redecorating or renovating your old kitchen, or bathroom and a lick of paint and some fresh accessories can really give your home the lift you are looking for. Deciding on which are the most important improvements to make is the key to adapting your current home to your current and future needs. If you are planning to have kids, you may need to extend to create additional bedrooms or a play area. If you plan on working from home, you will need to create an office space or workshop. Prioritising your needs is the key and then you can start thinking about how to finance them.

Any type of home improvement will count towards increasing the value of your home. The important thing is to choose improvements that are appropriate to your home. If you live in a three-bed semi, do not try to make it look like something from MTV cribs. It is not going to work.
You need to make improvements that enhance your home and make the most of what you have got in the right context. Take a good look around your home to see how you can adapt it to your changing lifestyle. We are constantly presented with advice and tips on home improvements from the growing number of television shows in relation to the topic. These can prove to be a good source of information in deciding on what you would like to do and what to avoid.
The house price increases seen in the boom years, coupled with a desire to stay living in a certain area, have led to a massive growth in home improvements as an alternative option to moving home. It is essential however to know the difference between home improvement enhancements that will give you a return on investment if you do decide to move in the future and home improvement luxuries which may not always reap the same returns. Whatever your decision, you will need to finance it.
The cost of any home improvement project will depend on a number of factors including the price of materials, the availability of labour, the location of your property, the space available for expansion. Each renovation or home improvement project is unique. Everyone has different requirements and a different starting base.
From the outset of your improvement project, you will need to consider the following:

Adding value to your home
Making your home more energy efficient
Quality of life
Planning permission
Financing the project
- How much you need to borrow
- Home improvement budget items to consider

Adding Value to Your Home:
Will your project add real value to your property? It is important to consider the current value of your home against the value that it would achieve following project completion. The cost of the project should be less than the difference between the current and the forecasted value. You must also take into consideration changes in the market during the renovation period. If the market value is on the up irrespective of any changes you make, then this needs to be accounted for. You see this happening on many property shows on television where the homeowner goes over budget on their renovation job but still manages to reap a higher return than anticipated. This can be largely due to changes in the market rather than any real added value. In many cases, the property would have increased in value to a similar degree without any actual improvements, which is common in a rising market. The opposite would apply in a market where prices are falling.
Making Your Home more Energy Efficient:
With the new energy rating certificates for second hand homes coming soon, energy efficiency in the home will soon be a key factor in distinguishing your home from your neighbours when it comes to selling. The more energy efficient your home, the better your rating will be and the higher the price you can demand for your property. Home improvements that result in improved insulation and lower utility bills will become key factors in influencing the final sale price of a property. So any home improvements that you make to improve energy efficiency will pay dividends in the long run.
Quality of Life:
You need to consider the impact that any renovation work will have on your quality of life and the quality of life of your family. Will the improvements make your home a more comfortable and safe place to live? The addition of an office could improve your quality of life dramatically by providing you with a greater amount of free time - time, which was previously spent, stuck in a traffic jam on the dreaded M50. On the other hand, will the addition of an office mean that you will never be free from work - never clocking off and becoming a slave to your job? These are questions to be considered when making home improvements that will ultimately affect huge aspects of your life and lives of your nearest and dearest.
You also need to consider what will improve the saleability of your property should you decide to sell. Is there a demand for properties similar to yours as a work-live unit? Are families moving to the area looking for larger, more open-plan living spaces? In order to get the return on any home improvements investment, you need to look beyond the short term and at your future plans.
Planning Permission:
Not all great plans come to fruition. You may have grand designs on your property, but will they get passed the planners? Check out the local areas for any similar builds that have gone on. The chances are if your neighbours got planning approval, then you will too. Getting approval will take time and money. Getting plans drawn up and approved can be an expensive so make sure you get a quality service from your architect.
Financing the Project:
The financing options are different for everyone. Get your builder to do up an estimate of all costs involved in the build.
You will still need to pay your mortgage while the work is going on and need to consider whether you will have to move out during the renovations. If so, you may have additional outgoings in terms of rent to pay. That is unless you are lucky enough to have friends or family that are willing to put you up for the duration of the build.
Consider how much you need to borrow?
It may be worth considering re-mortgaging to fund the project unless you are lucky enough to have savings to cover the expense.
Home Improvement Budget items to consider: