Financing Your Renovation
Financing your renovation project is very important, if you lack the funds then you cannot start or complete your project where delays are likely to happen. Financing your building project is different from buying an existing home, so it is vital that you talk with someone who understands the complexities of financing renovations such as mortgage brokers.
The best time to think about how you will finance your project is before you start it, where planning how much your willing to invest into your project and budgeting is essential to your renovation outcome. Always talk to a mortgage broker about what lending options are available to help you with your project, unless you are comfortable with borrowing from your personal bank. If you want to borrow funds from a mortgage broker make sure the are a member of the New Zealand Mortgage Brokers Association (NZMBA).
People usually borrow against the current value of the house they intend to renovate, or borrowing against the final value of the finished house if building new.
So the first thing you need to do is get a valuation before contacting your bank or mortgage broker, a valuation is a professional assessment of how much your property is worth.
Here are a few popular lending options available to your renovation project:
- Borrow up to 95% of the house and land value
- Don’t make any loan payments until you have moved into your property
- If you are self-employed you are not required to produce any financial accounts
- Borrowing additional funds for products and furnishings
- Pay interest only on the amount of money you have drawn out to pay your builder at any time
When knowing how much you are able to borrow from your bank or mortgage broker, you are able to discuss with your Builder and Architectural Designer what you can actually do with your set budget. This is where Build Plus can help you draw up different plans from your finalised budget and knowing what you are actually spending your funds on such as timber, carpet, windows, fencing, cladding and so forth.
Renovations can be a very expensive process so it is important that you plan every step, especially your budget. Nothing is worse than having your project delayed and uncompleted if you cannot fund the build. Know your budgeting limits! Try not to go over budget by making variations to your project as changes can cost money when the building process has begun.
Your budget should be accurate and you should stick to it! By doing so you avoid financial difficulties, this is where our Quantity Surveyor can help you by making accurate costings to every aspect of of your project such as labour, materials, machinery hire, etc.
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