It’s been said that we’re a nation of DIY-ers. Before the credit crunch, the property boom saw many people buying new places, doing them up and selling them on for a profit.
But in the years following the crash many were unable to sell, instead choosing to do up their homes and make them nicer places to live.
These days, we seem to occupy the middle ground. According to a 2014 survey by Lloyds Bank, 40 per cent of people undertake renovations to improve the look of their home, while 33 per cent do it to add value.
So, which improvements could add the most value? If research from Zopa is anything to go by, a conservatory is your best bet. Costing an average of £5,300, they add an average of £5,750 to the value of a property – a 108 per cent return on investment. The study also found that while a garden adds 88%, a kitchen adds just 49% and a bathroom just 48%.
Of course, the amount you spend on home improvements is totally up to you. The bigger the job, the more expensive it is likely to be. Another major consideration is whether you are actually going to do it yourself, or if you are using a contractor, which can increase the price significantly.
While prices do vary depending on the nature of the job, a loft conversion can cost an average of £24,600, a kitchen at £9,600 while a bathroom comes in at an average of £4,900.
So it’s a good idea to make sure you’ve done all your homework before starting, such as working out exactly how you’re going to pay for the improvements. There are a number of ways you might want to do this.
- Savings – If you have the money to pay for the improvements, then this may be the simplest option. You won’t have to worry about taking out credit and making repayments once the work is done.
- Credit – . If the job is not going to cost too much, then you may well be able to put most of the costs on a credit card. You might also want to think about a card that has a 0 per cent interest rate for new purchases or balance transfers. The higher the cost, the more likely it is that you’ll need to take out a loan to pay for the work. It pays to shop around to get the best rate in order to minimise the cost of monthly repayments.
- Mortgage – If the improvements are going to add value to your property, or if you already have equity in your home, you may well be able to increase the value of your current mortgage – or you could think about re-mortgaging. The plus side is that the interest rate is likely to be considerably less than it would be with a loan, but the downside is that you could be paying more interest by repaying it back over a much longer period.
If you’re going to finance your improvements through credit, it’s worth checking your Experian Credit Report first. It’s not uncommon for people to only discover problems with their credit once they’ve already gone to the time and trouble of putting everything in place.
Having lined up builders, materials, set timeframes and even potentially paid for some work, you wouldn’t want to discover that you couldn’t get a loan that you thought would be no problem.