Home renovations: Can it increase your property value?
Home renovations may seem like a large cost at first. However, the returns gained from improving your house can be substantial.
Certain improvements can boost your home’s value. This means you may get a higher price if you choose to sell in the future.
Even more importantly, they can make your living space a more comfortable environment.
So, it is useful to know what types may increase your property value and how these could be funded. Before renovating a property, it's good to speak with a local estate agent. They can advise on the potential added value your renovations may bring.
Types of home improvements
A range of home renovations can be completed, all of which have a different impact on your property value.
Here are a variety of home improvement projects you may consider.
Cellar conversions
Converting a cellar can boost your property value by approximately 30 percent, according to property price advice. It also gives you a larger quantity of living space to enjoy.
Common cellar conversions have included game rooms, offices, guest rooms, cinemas, personal gyms and storage spaces.
Although it can be expensive, if you ensure that the amount you spend is not more than the extra value added to your house, then it could be a profitable move.
Garage conversions
Another popular renovation is garage conversions, which may be useful if this space is empty.
Property price advice suggests that garage conversions can increase your home's value by 15 percent, but this will depend on the type of renovation carried out.
Garages are often converted into extra rooms such as gyms, cinemas, game rooms, offices and guest rooms.
Loft conversions
Loft conversions are also used to increase the living space and value of a property.
Many of these have included adding an extra bedroom, as the secluded nature of these spaces makes it ideal for a master suite.
A loft conversion can boost the value of your property by up to 15 percent, as highlighted by property price advice.
However, this depends on the type of home improvement completed.
To learn about how to fund these plans, read our blog on loft conversion finance.
Kitchen extensions or renovations
Kitchens are a vital room within any house, so many people look to extend or renovate this area.
A kitchen extension or renovation can improve the layout and space available, whilst also adding extra value to your home.
However, if you want to complete one, you may need planning permission first.
It is therefore important for you to carefully conduct your research and get permission, before making any plans.
To find out about how to fund these plans, read our blog on how to finance a kitchen renovation.
Conservatories
Adding a conservatory is an additional way to boost the value of your home by an estimated 10 percent, according to research.
Conservatories give you extra space, whilst allowing you to be closer to your gardens and nature.
Home renovations of this type are particularly popular throughout the summer months.
Alternatively, some people prefer to add a sunroom with a solid roof, to make year-round use of the space.
Converting a house to flats
Some people buy properties to transform them into flats, allowing them to explore new business opportunities.
Converting a house into flats can be a profitable business move that is estimated to add about 30 percent to the overall property value.
However, it can be expensive, and you will need to get planning permission first.
Driveways
If your property does not have a garage, then adding a driveway could be a beneficial way to improve your home.
Adding parking spaces can increase the appeal of your property, as many buyers value having a designated area to park.
This is particularly important if the on-road parking around your house is limited, so it could be a worthwhile improvement to consider.
If your property hasn’t previously had a driveway, you may need to get the curb dropped. You will need to contact your local council who may have pre-approved contractors licensed to do the work.
Bathroom updates
Bathroom improvements can be a positive way to update your home and may add further value to your property.
However, if you have to make changes such as moving the soil stack, or other big plumbing changes, it is worth calculating cost versus reward.
Financing home improvements
Renovations can be funded in a variety of different ways through a home improvement loan. However, there are many different types you can get, with the right borrowing option depending on the scale and cost of the project.
Secured loans
One method that can be used to finance these improvements is a secured loan. These are also often known as second charge mortgages or homeowner loans.
With this option, you can borrow a set amount of money, by securing the borrowing against your property. Therefore, to be eligible you must be a homeowner.
Using your property as security means if you repeatedly default on your monthly repayments and are unable to repay, your lender has the legal right to repossess it.
Due to this, it is important for you to carefully consider your options and seek professional help if you are unsure on what you could afford.
These loans can vary in size but are typically within the range of £20,000 and £500,000. So they could help to fund a variety of home renovation projects.
With this solution, the amount you can borrow depends on the lender's assessment of your affordability.
To assess the amount you can borrow, lenders will consider a variety of factors related to your circumstances. These include:
- Credit history
- Available equity in your property
- Personal income
Unsecured loans
An alternative method that can be used to fund home renovations is an unsecured loan, which does not require a property as security.
These can take the form of credit cards and personal loans. With this type of loan, lenders will base their borrowing decision on your credit score.
Due to the higher risk associated with this option, lenders will often not allow a substantial amount of money to be borrowed.
Therefore, it may be more suitable for lower-cost home improvement projects.
Overall, a variety of different borrowing methods can be used to finance home renovations, meaning that a range of options are available to you. However, before applying for either type of finance, you must consider your situation first.
Think carefully before securing other debts against your home. Your home may be repossessed if you do not keep up repayments on a mortgage or any other debt secured on it.
