Extension Guide Part 1: Plan your Finances

Looking into a home extension? It may sound like a scary prospect but adding to your living space can easily transform your home for the better. Most people are full of enthusiasm when first starting, keen to get the ball rolling straight off the bat! But with a little thought and a lot of planning and patience, you will be much more likely to get your dream extension without any of the stress attached! Follow our extension series and find out the best tips and tricks you should follow before you begin your extension journey!

Getting your Finances in Order

You may be emotionally ready to build yourself an extension, hoping to contact house or apartment developers Melbourne wide and beyond as quickly as possible. But first things first, you’ll need to get your finances sorted!

In some ways, building an extension to your home can be one of the biggest financial commitments you’ll ever make, with sweat, tears, and countless dollars going into the production of making your dream home.

So, making sure you won’t have any financial worries along the way can be a lifesaving decision!

Why Does it Matter?

Why worry about this now? Many simply opt to dive in headfirst, believing that their savings, ongoing salary, and relaxed budget will easily cover them in building an additional extension. However, studies have shown that over 80% of housing plans don’t come to fruition, with many being abandoned or put on hold due to unseeable events. Life’s unpredictability makes for some tough financial planning, but it’s better to be safe than sorry!

Create a Budget

Money managing skills might not be everyone’s cup of tea, but it is essential when organising your extension costs. Home developments, in general, come with a lot of expenses, such as council rates, construction, home insurance, and maintenance, which are just a few of the worries you’ll have to deal with. Organising your budget before you even begin your extension project will offer you strict guidelines so you don’t spend more than you should.

First, get a ball-park figure of what you would like to spend on the extension overall. After this, you can work out all the essential costs that will be required for your extensions, such as legal fees, construction charges, and changes in the foundation. Next, you can analyse this price with your goal total cost, seeing how much money you have left to spend on style, size, etc.

Clear your Debt

It may seem counter-intuitive to spend your money elsewhere when you are trying to save. But lowering your debt can help you apply for a better loan, with the bank lending you more money the smaller your debts are.

Working out your Loan

A lot of the time, many will consider applying for a loan when looking into extensions, with a number of loan styles available depending on the circumstances. For extension home loans, homeowners can borrow a large portion of the valuation of the property, and if you do have equity in the property, you may not face out of pocket expenses. However, be aware that even if you do receive pre-approval, it isn’t a guarantee that you’ll get a loan. Regardless of this, a pre-approval loan figure can showcase what you can expect to borrow, helping you organise the correct budget for your extension and organise other financial figures.

Set Realistic Goals

In life, making plans to save money can be easy, but following through is another story! Setting realistic spending limits and financial goals for your extension can help you maintain your overall budget. As you set your goals, ensure that they are realistic, by researching realistic time restraints and costs for each planning section. You can even set specific goals for certain areas of the construction, such as spending money for style, or time limits in paying off fees. Tracking your goals over time to feeling your accomplishments along the way will keep you motivated to continue following these goals.

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