home renovation loan

Is it Better to Build a New Home or Remodel?

Whether you’re looking to build a new home or remodel, there are pros and cons to both. It’s important to assess all the factors before making your decision – from how much time the project will take, to how much money you’ll need to spend to make your vision come to life. You may be looking to upgrade to a bigger home with a growing family or you may want to renovate your home with a more modern design. Whatever the reason, at QuickCash we can help you achieve that financially.

Here are some things to keep in mind when thinking of building or renovating.

Building a new home

If you’re thinking of building a new home, it’s important to keep in mind all the costs and time you’ll need to put in to achieve your desired result. Many people look at building a new home if there’s building space available in a neighbourhood they like or you want changes that can’t be added to your current home.

Here are some things to take into consideration when building a new home.

Costs

When you’re building a new home you might be buying a new section of land. This is one of the main costs associated with the building process. With the purchase of that land comes restrictions on how you can use it and what you can build on it. You’ll need to find out about land-use restrictions, district plan rules, resource consents, and land surveys.

The Housing Stocktake Report states the cost of building an average house in Auckland is $445,000, compared to $395,000 for the rest of New Zealand. However, this is the base cost and does not include other invisible costs that come with this process such as cost of design/architect fees, consent fees, or any other required permits as well as the actual cost of the land.

Time

When you’re building a new home, you’ll spend the majority of your personal time thinking about how it’s going as well as waiting for it to be completed the way you want. Along the way, you may also come across unknown factors that may add time to your desired timeline. You’ll need to be prepared for changes and delays which can be stressful for you mentally. At times the process may feel like it’s out of your control.

The time it takes to build a custom home depends on the size and complexity of the home. Building time can range from 10 to 16 months. Things such as weather or change in plans can make this process longer. If you’re building an architect-designed custom home, the design process alone can take 3 to 6 months plus time for permitting.

home renovation loan in action

Getting a loan

Before you start planning, it’s important to sort out your budget and get in touch with a few builders to get an idea of how much your project may cost. It’s important to sort out your finances so if anything unexpected happens you are still financially stable to support yourself and don’t undergo unnecessary stress in the process. Unless you have cash saved, borrowing against the current value of the house to do an extension, or borrowing against the final value of the finished house if building new, is the usual way of financing a building project.

Banks often turn down loan applications if you have multiple properties you’re paying rent or mortgage on because you may not be financially stable enough to pay interest on all these loans. All lenders will look at your annual income, whether you have any dependents, credit card history, and any fixed expenses you may have to get a picture of your financial situation.

Paying off the loan

The most common loan when building a new home is a construction loan. This involves getting a valuation done to estimate how much the home will be worth once construction is completed. Your valuation will be reviewed letting you know how much you can borrow and then when you get up a contract with your builder the payments will begin.

Once construction is happening the loan is paid in stages along with verification that the work has been completed at each stage. In most cases, you only pay interest on the money already drawn. You’ll start repaying the loan when the construction is actually finished. It’s important to not miss any payments so you can get it repaid on time and not have to pay any additional costs.

Legal and council requirements

Lawyers are costly but they are an important part of any process that involves purchasing land or building on a property. It’s always better to have a lawyer than not. You’ll need them to look over all the documents and contracts. Depending on the lawyer or firm you hire the payments can differ depending on what you need them for. Some charge by the hour whereas some invoice you an upfront fee. The cost depends on how many times throughout the process you need their help, but is likely to be thousands of dollars.

When building a new house, you’ll probably need to get resource consent. This is because there may be protected trees or rights of your neighbours to consider. It’s important to talk to your local council before purchasing, they can help you sort out resource consents and applications. For more information see Resource Management Act.

It’s also important to note that The Building Act places strict responsibility on the Council to ensure that what is submitted for building consent is what is actually built. Usually no further changes are allowed after the application is submitted. Check the stages of the building process before you purchase.

home renovation and dog

Remodelling a home

You might be looking to remodel your home if its features have become outdated or you’d like to invest money in your current home rather than moving or buying land. You may want to upgrade your kitchen or bathroom to meet the current trends or you might even be looking to put it on the market after the renovations. You can do all this and more without having to search for new land and usually while still living in the comfort of your own home.

Costs

The costs of remodelling will depend on the amount of work you’re looking to get done. Often the cost can be beneficial as it adds value to your property and makes you fall in love with your house all over again. The costs of remodelling in NZ vary depending on what room you’re working on and what materials or appliances you use. For example, if you’re looking at remodelling your kitchen in New Zealand it can range from $25,000 to $35,000. If you want to update a medium-sized bathroom it can cost anything from $20,000 to $35,000.

To help keep costs down try and keep the plumbing situation as is. If it needs upgrading or changing, costs can easily blow out. If you want the outside of your house painted it could cost around $10,000 but again depends on the size of your house. In most cases, remodelling will cost you less than starting from scratch.

For more estimates check the cost to renovate a house in New Zealand.

Time

When remodelling your house, design and planning can take up to four months before you even get started on the building work. If you need the work done by a certain time, it’s important to do your research and communicate with the builders and find out whether it’s achievable to do the work in your desired time frame. Depending on the type of remodel it could take an additional 3 to 4 months after the planning stage to actually build or renovate. In terms of renovations, they usually take less time than building a new house.

Getting a loan

Whether you’re looking to update your kitchen or renovate your bathroom, it can be expensive. At QuickCash we offer a home renovation loan for the exact purpose of helping you to remodel your home. If you need the changes done ASAP, a home renovation loan can help you increase the value of your property by repairing or building something.

A home renovation loan can also reduce long term expenses. If you’re going to install solar panels, that may reduce your electricity costs. Renovations can also help to lift the safety of your home by adding a fence or fixing a leak. You can borrow money quickly with a home renovation loan from QuickCash. You just have to pay it back in installments over the agreed time period. This means you can get on with your renovations as soon as possible without having to wait around.

Applying for a home renovation loan

If you’re looking at borrowing money for home renovations, you’ll need to go through the same application process as you would for any other personal loan. At QuickCash, the application process is all done online. All you need to do is fill out our application form and you could have the money ready to go in the same day.

When filling out the form, you’ll need to provide details on what you’re renovating, how much money you need to borrow, information on your current financial situation and the time period you’ll be paying the loan back in. All this is required to get an overview of your financial situation and whether you’ll be able to afford the loan you’re taking out. Additionally, you’ll need proof of identity such as driver’s licence or passport and provide information on your assets such as a car, boat, or real estate.

home renovation loan

Paying off loan

If you want to pay off your personal loans fast, firstly make sure you’re not borrowing more than you can afford to pay off. It’s also important to ensure that if something out of your control comes up you’ll still be fine financially and it won’t impact on your ability to pay off the loan. After your home renovations are complete, most people benefit from paying off their debt as soon as they can.

An easy way to pay off a loan faster is by rounding up payments. For example, if you usually pay $170 a month, round it up to $200 and you’ll see yourself paying it off faster. You can also set up automatic payments so you don’t forget about the pay dates. Most people pay off their loan successfully by following the repayment plan closely, whether it be weekly, fortnightly or monthly. At QuickCash, there are no charges for early repayment, so you’ll save money on interest by paying off your loan quickly.

Legal and council requirements

If the renovations you’re doing require a lot of work, time, and people, it might be handy to get a lawyer to look over your agreements and contracts to make sure everything is in order. It’s also important to check all the council requirements and whether you’re allowed to go through with the renovations that you want. If you’re looking to expand it could interfere with your neighbours or the types of things you’re allowed to do even if it is your own property. You may need to get council consent for example if you’re adding a deck or pool to your house. If you have a cross-lease title you’ll need to get approval from your neighbours before making any exterior renovations.

Read ‘Planning a Renovation‘ for more information.

If you’re looking to save time and want minimal costs associated with your project then renovating your house is the better option. Building a house will take up the majority of your time from planning to construction, and there’s an endless amount of things that could happen to delay the process and end up hurting you financially. With QuickCash it’s easy to get a loan for home renovations, which means your project can be fast-tracked and you’re don’t have to stress over your finances.

Get in touch with us on 0800 784 252 or fill out our online application form to get started on your dream home.


Disclaimer: This article is intended to provide general information only. It does not take into account your financial needs or personal circumstances. It is not intended to be viewed as investment or financial advice. Should you require financial advice you should always speak to an Authorised Financial Adviser.