Recently a client of mine, Helen, had an interesting decision to make - move to a new house or upgrade her current home?
When we first spoke she had only considered moving, but having looked into her other options she realised that she should also seriously consider improving her home. Not only did she want a bigger, more modern kitchen, but she was in desperate need of additional space. After making a few enquiries she discovered that her ideal plans were actually possible (with room to spare) on her current property. Something that came as a surprise!
So, Helen decided to hedge her bets. She started viewing new houses while also planning a redesign of her home!
She had to consider cost but also choice and scope. If she opted to improve then she would have more control over the plans, whereas if she moved, she’d have to settle for whatever she liked the most.
After further research, the costs involved in moving were significant. Stamp duty alone was going to make a large dent. This was not Helen’s only goal and so we had to consider the impact of both options on the rest of her financial goals. Moving to a new house was going to mean dipping into her savings as well as taking on a larger mortgage. Improving her property on the other hand only involved remortgaging.
After several lengthy discussions, we decided that Helen should remortgage and improve her current property. This meant she didn’t have to dip into her savings, which would have negatively impacted on her other goals. One of which was a higher priority!
3 reasons why improving your home is a better option
You don't pay the costs of moving
Like Helen, many face significant costs when moving let alone the hassle involved. There’s stamp duty, survey, conveyancing and estate agent fees and the costs of a removal company to consider because you’re both selling and buying a property.
The total cost will vary depending on the value of the property as some of the costs increase hand in hand with the value.
By improving rather than moving, you don’t pay any of these costs so all your money goes directly towards upgrading your property.
You don’t have to drain your savings to improve
Moving costs generally have to be paid upfront.
If you were moving from a £400k property to a £550k property, you’d likely be looking at total moving costs of around £28k. Like Helen, if you have other financial goals that you are saving towards, putting such a large dent in your savings can have a big impact, and could result in you not hitting one of your other goals.
By improving your house, you can remortgage, allowing you to free up funds to pay for the work on the property by borrowing more. One thing to be wary of is letting your loan to value (LTV) ratio slip too much as it will impact the interest rates available to you.
Improvements are always your own
You can dictate proceedings when you improve your property or at the very least have the final say. What would be your ideal kitchen given your budget? What would you like the shape of the conservatory to be or the extra bedroom?
My point is that you make these decisions, you choose the look and feel of your house.
When you move house, you take on someone else's ideas and style. While you may love it, often times you’ll still want to put your own stamp on it. By improving your own house, you can give it the personal touch you always wanted to.
You’re in the driving seat.