Do you have pre approval and know what your budget will be? Getting your finances in order is one of the first steps in the renovation process. Knowing your budget will then help us help you to navigate your renovation options.
Something you may need to consider with your finances is over capitalisation. You’ll need to consider the cost of your renovations. And you’ll need to be confident you could recoup those costs if you were to sell your home. This can sometimes be a big concern for your financial institution.
When borrowing for your renovation, you should first get pre-approval from your bank. You will then know what budget you’ve got to work with. When considering your loan, your bank will want to understand your property value. They will also ask about your renovation plans. This is important, as they don’t want you to be over capitalizing on your home.
Once you’ve confirmed how much you can borrow, come and talk to us. Based on your property value and budget, we can then help to steer you in the right direction. We’ll make sure you understand what sizing and materials will suit your budget. You will then have a much clearer idea of what you’ll be able to get done, within your budget.
In case this is your first renovation, you may not be familiar with how capitalisation works. The bank evaluates properties and puts a price figure on them. This is what they think the property should be able to sell for when your renovation is complete.
They may not agree that your renovation will increase your property value. They would then consider it to be over capitalized. That may affect how much they are willing to lend you. Depending of course, on how much you have already borrowed and how much equity you have.
Talking with us will help give you a clearer picture of what might work best for you. You may find, for example, that your plans are actually a bit beyond your budget. It’s always better to realise this ahead of time. With our knowledge of materials and the building process, we can help you get the best value out of your budget.
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