Posted on 13 June 2018 by
There are a lot of costs associated with moving house, from stamp duty, survey costs, estate agents fees etc… No wonder that some people decide moving is too stressful and expensive, and decide instead to extend their current home. Of course there are costs associated with building work too. Often homeowners look to borrow against their property to raise the capital necessary to add another bedroom or new kitchen. However, it’s not something to be undertaken lightly, so here’s five things you need to consider before getting the builders in:
Are you adding extra space because you need it and expect to stay there for a number of years? Or do you want to add value to the house? If you are doing this for yourself and your family, then the final value of the property after the work is important, but not vital. If you want to sell though, will you make enough of a return on your investment?
Hiring the right people for the job doesn’t just need to happen once the building work starts. You’ll need to get things right at the planning stage – you might need an architect to draw up plans, and then ask them and a builder’s opinion on whether you’ll need planning permission. If it’s a complex project, you will need to consider whether you are going to employ a project manager. If you have no or little experience of building work having one person managing the whole thing for you is so much easier.
Once you know what you want to do, obtain quotes from at least three local contractors for both materials and labour. And then add 20% to this as a contingency fund as things often go wrong.(And don’t forget to factor in the VAT!)
Will you be able to stay in the house, or is that going to prove impractical? Living on a building site is no fun, especially with children, pets etc... And it’s even worse in winter. If the work is invasive then you need to consider moving out, and if you are renting you need to take that into account for your budget as well.
It may be that if you are planning a small project, you can be placed with a standard lender on a remortgage basis. However you need to have enough equity in the house to borrow the full amount that you require before the work is done, as standard lenders will always work off the current value of the property; not the end value. If your project is larger, and you need more money we can turn to a development or self-build provider who can look at both the starting value, end value and the budget to potentially lend more money as the build continues. As you can imagine these loans are more complex and expensive.
If you are considering home improvements feel free to speak to one of our expert advisers on 0344 346 3672.
The blog postings on this site solely reflect the personal views of the authors and do not necessarily represent the views, positions, strategies or opinions of John Charcol. All comments are made in good faith, and John Charcol will not accept liability for them.