If you’ve owned your home for more than six years, you’re in a powerful position to make one of the smartest financial and lifestyle decisions available – extend or renovate your existing property instead of selling and buying again.
With significant home equity on your side, rising market values and the high costs of selling and moving, staying put and improving your current home is not only practical, it’s a strategic investment.
You Can’t Buy Today for What You Paid Then
It’s no secret that Melbourne property prices have increased substantially over the past decade. The amount you paid for your home 6-8 years ago wouldn’t come close to securing a similar property in the same neighbourhood. If you sell and buy again, you’re not just making a lateral move. You’re buying back into the current market at a premium, and often getting less for your money.
Moving Often Means Compromising
Even after paying today’s inflated prices, most buyers find that their new home still isn’t perfect for their family. There’s usually a list of things that need changing – kitchens to update, bathrooms to renovate, layouts to open up. These renovations come on top of the already high cost to purchase. In comparison, renovating your current home allows you to tailor it precisely to your family’s needs, wants and lifestyle, with no compromises and no moving stress!
The Hidden Costs of Selling and Buying
When it comes to reasons to stay, the financial one tops the list. Many homeowners underestimate just how much it costs to sell and buy again and there are a number of expenses including:
- Real Estate Agent Fees which are typically 1.5% – 2.5% of your sale value. For a $2M property, you are looking at almost $50,000!
- Advertising and marketing fees which can be fixed or between 0.5% and 1% of your property’s selling price
- Government stamp duty – to purchase a $3M property, stamp duty is around $175,000
- Conveyancing and legal fees
- Building and pest inspections
- Moving and relocation costs
You could end up spending $150,000 to $200,000 or more, depending on your property’s value – and you get nothing tangible for this money. They are simply hidden costs of changing address.
Reinvest In What You Already Own
Imagine putting that same amount of money into an extension or a full-scale renovation resulting in a customised space that you and your family will love.
Not only do you improve your lifestyle, you are adding value to your home at the same time. Extending and renovating allows you to invest in your own asset, not in the fees and costs that provide zero return.
Leverage the Equity You’ve Built
If you’ve owned your home for more than 6 years, it’s likely you’ve built up substantial equity through both capital growth and mortgage repayments. The equity in your home can be accessed through refinancing at competitive home loan rates to fund your extension or renovation, and accessing your equity is typically more affordable and financially efficient than other forms of borrowing.
Renovations Often Add More Value Than They Cost
Custom and well-designed extensions and renovations can significantly increase the value of your home, especially in suburbs where space, functionality, and modern finishes are in high demand. They can easily boost your property’s appeal and future resale price all while delivering a strong return on your investment.
Tax-Free Gains for Your Primary Residence
Unlike other investments, the value added to your primary residence through renovation is generally exempt from capital gains tax if you sell. That means you can increase your property’s value without the tax burden that applies to other types of financial gain.
Stay in the Area You Know and Love
While selling up and moving house may look appealing, it often comes with trade-offs.
Not only is there a substantial change to your bank account once you pay all the real estate and moving costs, you also leave behind a great neighbourhood, local schools, parks, friends, and community – the reasons you may have moved to your current home in the first place.
A custom designed extension or renovation might be the answer to your dream home as it allows you to stay in the suburb you know and love, while creating a home that suits your current needs and plans for your future.
The Smartest Move Might Not Be Moving at all
Instead of navigating the financial and emotional toll of selling and buying again, consider the value already under your roof. Extending or renovating your current home gives you the best of both worlds – an improved lifestyle and increased property value, without the compromises and hidden costs of moving.
You already own an appreciating asset. With strong equity, rising property values, and the opportunity to tailor your home exactly to your needs, staying put and reinvesting in what you already own could be the smartest property decision you’ll ever make, rather than giving away hundreds of thousands of dollars in fees and taxes for a sideways move.
The smarter choice isn’t always a new address, sometimes it’s making the most of the one you already have.
If you would like to find out more as to how Sherbrooke Design and Construction can help you solve your property dilemma, and learn more about how we can help you achieve your vision of a custom designed and built individual lifestyle for you and your family, please call our office and make an enquiry today.
