Extending or Moving? Which is the better option?

Published on November 24th, 2020
  Written by 
Bill Tsouvalas
Bill Tsouvalas is the managing director and a key company spokesperson at Savvy. As a personal finance expert, he often shares his insights on a range of topics, being featured on leading news outlets including News Corp publications such as the Daily Telegraph and Herald Sun, Fairfax Media publications such as the Australian Financial Review, the Seven Network and more. Bill has over 15 years of experience working in the finance industry and founded Savvy in 2010 with a vision to provide affordable and accessible finance options to all Australians. He has built Savvy from a small asset finance brokerage into a financial comparison website which now attracts close to 2 million Aussies per year and was included in the BRW’s Fast 100 in 2015 as one of the fastest-growing companies in the country. He’s passionate about helping Australians make financially savvy decisions and reviews content across the brand to ensure its accuracy. You can follow Bill on LinkedIn.
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Your life moves in stages and you could find yourself needing more space from your home than before. There is the option to either extend or move into a new house altogether, but how do you know which one will be the best decision? Here are a few handy tips to help you in deciding whether moving or extending your home will be a good move.

1. If your home is already a good investment

Your home will have emotional attachments to it, but it is the value of your house that could have the overall say. If you have a house situated in a good location, close to all the amenities, and you have strong ties with your neighbourhood, renovating your home can be the way to go. Researching the cost of renovating your home to increase the value of your home can be a point in the right direction.

2. Planning

Moving or extending can both have benefits, but this will also be affected by your financial situation. Planning and budgeting can give you a better understanding of what can be financially viable for you. Creating a realistic budget is critical when it comes to choosing an option that will improve your current home or help you look for another one.

Consider how long you will keep your home for once it has been renovated. Also check whether your home is insured for these changes that you are planning to make. Remember to get building permits for any construction, and confirm whether your design follows your local regulations.

3. Cost of Materials

Renovation requires material and depending on how big the project is you could end up forking a lot of money on material. If you need specialised material, expect the cost to increase considerably. For example, if you are planning to do a single floor extension using timber this could cost you around $1,500 to $2,100 per m2.

4. Making the move

If you have calculated the cost of extending your home and realised that it doesn’t suite the grand scheme of things that you want from a home, then making a move can be the next best thing. However, you need to assess your reasons for moving and whether it will be affordable. Moving can be ideal if you live in a neighbourhood that isn’t close to important amenities, the house is expensive to maintain, or too cramped. Getting a pre-approved home loan will help you know how much house you can afford. Always keep in mind to compare your options to get the best possible rate

5.Create a budget for your move

Getting a mortgage to finance your new home is not the only expense that needs to be budgeted for. Calculating the costs for the transportation of your furniture, food, and accommodation costs if you need a temporary place to stay is also important. Other major expenses that need to be factored in are legal fees, fees and commission, stamp duty, and refinancing fees.

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