10 Nov Should you renovate your existing home instead of building a brand new one?
If all you have ever wanted is to live in a brand-new home but feel discouraged by sky-high building costs and scarce land, this may be the answer for you … Transform the home you already have.
Why a renovation might be your best move
Instead of selling up and starting from scratch, think about how your current house could work better for your lifestyle. It might be adding an extension, creating an outdoor entertainment area, upgrading your kitchen, or even installing a pool. You get the “new home” feeling without the stress and expense of a complete build.
Client story: Increasing value and making my home more functional
“I bought my home in 2019, I was always somewhat frustrated with a small lounge type space which was an awkward shape so it was difficult to utilise well. Everything in the house was original 1990’s.
I asked my architect friend to design something more functional which involved moving the kitchen so I knew that was going to be an expensive job. After renovating the bathrooms in 2022, I couldn’t stop thinking about the plan my friend had designed.
I considered buying a new house but decided that my current home is in a great location and by beginning of 2025 I decided I wanted to renovate the rest of the house. This involves closing in the carport to create a second lounge, putting in a new kitchen in a new location and converting the old kitchen room into a 4th bedroom and removing a wall to create an open-living space for kitchen dining and lounge. This will not only increase the value of our home but also make the spaces much more functional.
I engaged with Pete from Mortgage Link and started the process.
Pete has been consistently available in assisting with the borrowing. He is very knowledgeable and helpful when it comes to bank process and what information they require and could easily guide me through the process. Pete kept me updated every step of the way and nothing was too much to ask of him. I am very grateful for the level of advice and professionalism from Pete and wouldn’t hesitate to recommend him to anyone wanting to borrow funds.”
What loans can you get for a renovation?
Essentially, you’re borrowing against the future value of your home – what it will be worth after the improvements are complete.
- Construction loans: Funds are released in stages as work progresses
- Top-up loans: You increase your existing mortgage to cover renovation costs
- Personal loans: Sometimes suitable for smaller projects, though usually at higher interest rates
The way it typically works is the lender will assess your current home’s value and review your renovation plans. They’ll consider quotes from builders and tradespeople to determine how much your property’s value will increase. Based on this, they’ll approve a loan amount.
Benefits to staying where you are
Location – Do you love your neighbourhood? Your kids’ schools? Your short commute? Renovating means keeping all those lifestyle benefits while getting the home improvements you want.
Cost – Even extensive renovations typically cost less than buying land and building from scratch. You’re working with existing foundations, connections, and structures.
Less disruption – While renovations certainly involve some chaos, it’s often less stressful than coordinating a full build, selling your home, and managing temporary accommodation.
Faster results – Most renovation projects are completed much faster than new builds, which means less time in limbo.
Taking the first step
- Get a current valuation of your home. While you’re renovating to enjoy your home, it’s wise to think about whether these improvements will add value if you eventually sell.
- Sketch out your dream improvements. Depending on your project, you’ll need building consents and resource consent. Factor in these timelines and costs.
- Talk to a couple of builders for preliminary quotes. The lenders will want to see detailed quotes from licensed contractors. Vague estimates won’t cut it.
- Renovation projects often uncover surprises (old wiring, hidden water damage, wonky walls).
- Meet with a Mortgage Adviser to discuss your options. They can help you understand what type of loans are available and what makes sense for your situation.
Come and talk to us
When it comes to your dream home, sometimes the smartest move isn’t actually moving. It could be transforming what you already have into something wonderful. If this is something you are considering, come and see one of our Mortgage Advisers. We can talk you through your options and help you every step of the way to create your dream home.