Should you renovate or relocate?

If you’ve reached the point where your home no longer meets your needs, you face the inevitable decision to either renovate or relocate. Renovate or relocateTo help you explore both avenues, we examine the perks and costs of each approach.

You’ve decided that your current home or postcode no longer complements your lifestyle, but you can’t make up your mind about whether it’s time to upgrade your existing home or to move to a new location. We offer practical advice and considerations to help you decide.


Renovating your existing property allows you to create the home you want in the location that you’re already settled in. However renovating also presents various challenges, including the disruption factor, the need to temporarily vacate, as well as the expense and time involved.

Signs that renovation may be a sensible approach include:

  • You plan to stay in the area for the long term
  • The local area provides the amenities and facilities that suit your lifestyle
  • You have the time and budget to invest in a renovation project
  • You are prepared (and have the funds) to temporarily vacate if necessary
  • There is strong demand and price growth in your current area
  • The local council is proactive
  • You are prepared to mitigate the risk of overcapitalising by consulting professionals to ensure that you carefully select your value-adding activities


Whether you’re planning a major structural upgrade or small cosmetic repairs, renovating your property can offer several benefits including:

  • Added value. A well-planned renovation can add between 10-15% to the property’s original value especially if you plan to hold on to the property for at least 5 years. You should speak with a local conveyancer and real estate agent to get a feel for how much value your renovation can add to your property.
  • Boost sale price. If you intend to sell the property at some point in the future, a carefully planned and executed renovation can increase the property sale price. You should take proactive measures to ensure that your property will appeal to a large pool of prospective buyers.
  • Avoid sale and purchase costs. Although a renovation can be expensive, you will avoid costs associated with selling and purchasing a new home such as stamp duty as well as legal and agent fees. You can also conduct some DIY tasks yourself which can help to lower costs.
  • Tailored upgrade. Unlike a new home, you can plan your renovation in a way that specifically meets your needs. Whether it’s a growing family, a home office or a retirement lifestyle, you may need to reconfigure the layout and functionality of your home to cater to your future plans.


  • Risk of overcapitalising. Overcapitalising occurs when the cost of the renovation outweighs the amount of value added to the property. For instance, imagine you bought your house for $500,000 and then spent $100,000 renovating it. If the median price for similar houses in your area is only $550,000, then you may be out of pocket by $50,000. Overcapitalising is a major risk if you plan to sell your house in the short to medium term.
  • Inspections. Before you renovate your existing property, you should get a building and pest inspection to see if there are any structural factors which may inhibit the success of your renovation project.
  • Budget. Typically a renovation budget should be around 5% of the property purchase price. For example, if you bought a property for $780,000, then you should budget around $39,000 for the renovation. It can be easy to blow out your budget when renovating which is why you should speak with an accountant or financial planner to conduct a cost-analysis to ensure that you stay on track. This is also why it’s essential that you factor in 10% of your renovation budget to allow for contingencies. Learn more about renovation budgeting tips.
  • Careful planning. Renovating requires careful planning and execution so consider whether you have the time and resources to successfully conduct a renovation. There are many home renovation planning apps available which can help you plan and execute your project.


According to Home Design Directory (2015), the total average cost for a major renovation is $196,818 however this will vary significantly depending on the type and scope of the project, and the quality of work undertaken.

You’ll need to factor in costs for:

  • Professional advice (an accountant or financial planner may charge around $200 per hour)
  • Council fees ($300 - $700)
  • Initial drawings ($3,000 and $8,000)
  • Building inspection ($300 - $500)
  • Labour and installation ($50-$60 per hour or square metre). Find out how much you should be paying for your trades.
  • Material costs (vary widely depending on the supplier)
  • Finance costs (will vary depending on the lender and interest charged)


Depending on the scale of the renovation, and your financial situation, there are several ways you can fund your renovation, including:

  • With savings
  • Through a loan top-up
  • Refinancing your home loan
  • Taking out a construction loan

You can compare a range of refinancing home loans below to find one that suits your needs.

Rates last updated July 23rd, 2017
Loan purpose
Offset account
Loan type
Your filter criteria do not match any product
Interest Rate (p.a.) Comp Rate^ (p.a.) Application Fee Ongoing Fees Max LVR Monthly Payment Essentials - Variable (Owner Occupier, P&I)
A basic home loan with a competitive rate and low fees.
3.64% 3.66% $0 $0 p.a. 80% Go to site More info
Greater Bank Ultimate Home Loan - Discounted 1 Year Fixed LVR ≤85% ($150K+ Owner Occupier)
Discount off an already competitive interest rate for loans over $150k. NSW, QLD and ACT residents only.
3.59% 4.48% $0 $375 p.a. 85% Go to site More info
UBank UHomeLoan Variable Rate - Standard Variable Rate Value Offer (Owner Occupier P&I)
Combine a low variable interest rate and free redraw with no application or ongoing fees.
3.74% 3.74% $0 $0 p.a. 80% Go to site More info
NAB Choice Package Home Loan - 2 Year Fixed (Owner Occupier P&I) First Home Buyer Special
A special rate for first home buyers buying residential property and borrowing over $150K. 350K NAB Rewards Points offer available. Terms and conditions apply.
3.69% 4.86% $0 $395 p.a. 90% Go to site More info
3.69% 3.72% $0 $0 p.a. 80% Go to site More info
Reduce Home Loans Rate Buster 100% Offset Variable Home Loan - Up to $750k (LVR <=80%)
Borrow up to 80% LVR with no ongoing fees and a 100% offset account.
3.54% 3.54% $440 $0 p.a. 80% Enquire now More info
Mortgage House Advantage Home Loan 80 - Special Owner Occupier ($500K+)
A low interest rate home loan that lets you borrow up to 80% of the property's value.
3.73% 3.88% $0 $10 monthly ($120 p.a.) 80% Go to site More info Offset Variable - Up to 80% LVR (Owner Occupier P&I)
Take advantage of a 100% offset account along with no annual or application fees.
3.72% 3.74% $0 $0 p.a. 80% Go to site More info
CUA Kick Start 2 Year Introductory Variable Home Loan - (Owner Occupier, P&I)
A competitive rate for owner occupiers looking to buy or refinance.
3.79% 3.97% $0 $0 p.a. 90% Go to site More info
ING DIRECT Orange Advantage Loan - $150,000+ (LVR <=80% Owner Occupier, P&I)
A fully featured home loan with an offset account and discounts available. $1000 cashback offer available for loans over $300k. Terms and conditions apply.
3.79% 4.11% $0 $299 p.a. 80% Go to site More info


Before you decide to renovate, you should enlist the right professional help to ensure that you’re making the right decision. Speak to your bank manager, accountant, financial planner, conveyancer and local real estate agent to make sure that a renovation is feasible and realistic.

Seeking the right advice regarding your renovation can help you avoid pitfalls and common renovation mistakes. These professionals can help you determine the scope of the renovation, whether it can be achieved on time and on budget, and offer advice about the best finance option available and how to avoid over-capitalising.


If the renovation numbers don’t add up or the work involved is too extensive, then relocating may be a better option for you. Relocating involves selling your existing home and purchasing a new one.

It may be time to relocate if:

  • The property no longer meets your needs
  • The amenities and facilities in the area no longer meet your needs
  • The local council is not proactive
  • There is a high risk of overcapitalising
  • The market presents a good time to sell


  • Lifestyle needs. It may be beneficial to relocate to a new area if it better satisfies your lifestyle needs. For instance, if you previously lived in a low socioeconomic area with a high crime rate and you’re planning on having children, you may want to move to an area that offers greater security.
  • Property needs. If your existing property is run down or outdated, it may be an attractive option to move into a new property with greater structural integrity.


  • Sale ready. Whether you’ve already bought another place or you’re looking, you’ll need to get your property ready to put on the market and find ways to boost the sell-ability of your home. This may involve conducting minor repairs and cleaning. You’ll need to think about hiring a local real estate agent to guide you through the sale process.
  • New location. If you move to a new location, carefully consider whether the market offers positive price growth and better capital gains potential. You may also want to think about whether the suburb hosts the amenities and facilities that you’re after. For example, if you’re sending your children to school next year, you may want to ensure that the property is within close proximity to local schools and parks.
  • Logistics. You’ll need to carefully plan the logistics of moving out of your current property and moving into the new one. This may involve hiring a removalist.
  • Cash-flow. When relocating, you’ll need to think about the likely proceeds you’ll receive, as well as any tax implications from the sale such as capital gains tax (CGT). With the help of an accountant or financial planner, you’ll need to work out whether you need to take out a new loan or refinance your existing loan if it does not offer portability.


If you decide to relocate, you’ll need to budget for costs such as:

  • Cleaning services ($25 - $30 per hour)
  • Minor repairs ($500 - $700)
  • Sale costs (e.g. an agent’s commission is about 2% of the property value). You can use our property selling calculator to get an idea of all sale costs.
  • Loan exit fees ($250 - $350)
  • Marketing costs ($500 - $800)
  • Conveyancing and legal charges ($600 - $800 depending on complexity of work required)
  • Removalist costs ($100 - $250 depending on the distance you are moving)


When relocating, it’s a good idea to speak to a local agent, conveyancer, accountant and buyer’s agent to help you coordinate the logistics of moving from one property to another.

Belinda Punshon

Belinda is a journalist here at Specialising in the home loans and property sections, she is passionate about helping Australians improve their financial wellbeing.

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