Owning a home is a dream for many, but that dream comes at a cost. In Australia, homeownership rates are actually down, with fewer than 70% of families owning a home. With costs skyrocketing around the country and supply levels low, it’s only becoming more difficult to afford a home.
However, those who already own a home aren’t entirely out of the woods. Renovation costs are also on the rise thanks to supply and labour shortages. That means achieving your dream home might feel like an impossible dream. Whether you’re looking to buy a home in the near future or renovate your current space, here are expert tips for how to manage rising home and renovation costs.
Avoid Overspending on Your Mortgage
First, if you’re shopping for a home, there are some tried-and-true methods to keep costs lower. While you can’t avoid spending more than if you purchased, say, 10 years ago, a bit of mindfulness goes a long way. Consider these tips below:
- Shop around: Not all mortgages are created equal. You should always shop around with multiple lenders to make sure you’re getting the best rate. Different providers have different qualifications and programs. This means one might offer a significantly better deal. Keep in mind you can easily apply for a number of loans within a short period of time without additional hits to your credit rating.
- Save for a larger deposit: If you’re able to save for a larger deposit, this will ultimately reduce how much you need to borrow. If you want a lower interest rate (and lower payments long-term, a bigger down payment is the fastest way to achieve that.
- Negotiate with your seller: Found a home you fell in love with? Sellers might be motivated to help. While not all are willing, many can negotiate paying closing costs on behalf of the buyer as well as other savings. If a seller hopes to make the sale quickly, the odds are in your favour.
- Look in lower-cost areas: As the saying goes, the most important thing in real estate is location, location, location. Higher cost of living areas also have higher home prices. If you’re willing to look outside major cities, you can usually score significantly cheaper prices and property taxes.
For most, buying a home is the largest purchase you’ll ever make. Be sure to tread carefully and fully understand the terms of your mortgage before signing any agreement. A home can be a smart investment, but only if you’ve considered how it fits into your long-term financial plan.
Plan for an Affordable Renovation
Next, if you already own a home, how do you plan for an affordable renovation? According to the Nexus Homes Group, the average renovation in Australia costs over $40,000. That’s no small chunk of cash! If avoiding overspending is your main concern, consider these tips:
- Prioritise what matters: Budgeting is all about choosing what’s most important to you. Even if you ultimately wish to renovate your full house, starting with 1-2 rooms can save you significant funds. Highlight your priorities and make a thorough plan. You don’t have to do everything at once!
- Look for fixed prices: When dealing with home remodelling contracts, it’s easy to get overwhelmed. While hourly pricing might sound good upfront, it often leads to additional payments down the line. Instead, ask contractors about fixed-price contracts. This means you know exactly how much you’ll be paying upfront, and there’s no room for surprises.
- Explore financing options: Did you know you have a lot of options when it comes to financing your renovation? This is ideal if you don’t want to fork over a lot of cash upfront. You can consider a home equity loan, a home equity line of credit, or even a low-interest personal loan.
- Do it yourself: While not always the right choice, you’d be surprised just how much you can learn to do yourself. The internet is a wealth of resources, and you shouldn’t spend money on labour if you can do a good job yourself. However, be honest with yourself and your skill set. You don’t want to end up spending even more down the line for a botched job!
Like any big purchase, weigh the pros and cons. There’s often a lot of pressure to have your home look “perfect,” but in reality, your home is what you make it.
Find the Home You Love in 2024
Whether you’re purchasing a home or renovating the one you have, you deserve a home you love. However, your home should never come at the expense of your financial wellness. Always consider the long-term impact of your purchase or renovation.
Need help exploring your home or renovation budget? With rising home costs, don’t face your next steps alone. Contact a member of our team today on 1300 368 322 for personalised assistance you can trust.