Buying a house that needs cosmetic work, or refurbishment, is often an affordable option.
But, do you have enough saved to cover these renovation costs? Or, is buying a ‘fixer-upper’ first home more hassle than it’s worth?
If you’re struggling to decide, we can help. Time to weigh up your options...
So, what is a fixer-upper house?
To put it simply, it’s a house that needs in need of repairs. This can vary from major renovation (such as structural repairs) to more simpler redesigning. For this reason, these type of properties are often cheaper than others on the market.
As a result, many first-time buyers see them as a way to save money and a more affordable way to get onto the property ladder.
Pros and cons of a fixer upper
These type of homes have both advantages and disadvantages. Some are more obvious, others you may not have considered.
Advantages of a doer-upper
Let’s start with the positives.
One of the main advantages of fixer-upper properties, and one of the most well-known, is that it can be a cheaper option.
With the difficulties saving for a house deposit, plus other related costs, it’s easy to see why many first-time buyers may consider this as the most affordable route.
Gives you a wider choice of location
Those buying fixer-uppers might find their choice of location widened. You may find yourself able to afford to buy in an otherwise unaffordable area.
Chance to add value
Home renovation can add value to your home.
This means you have the possibility to make a profit when you eventually come to sell, particularly if you snapped it up below the market value.
Can make it your own
Doing up your home gives you the chance to personalise it.
From the kitchen to the bedrooms, you can fix up your home your own way. For many, this is an extremely enticing option.
Disadvantages of a doer-upper
Of course, there are some inevitable downsides. Buying a home can be fraught with difficulty, and fixer-uppers are no exception!
Renovation can be expensive
Some buyers forget that, while they may have bought their home for a lower amount, renovation costs (e.g. labour and materials) can rack up.
From construction loans to builders’ fees, everything has its price. Tightly manage and scrutinise your spending, and have some funds set aside as a contingency - renovation projects can be prone to going over budget!
In some cases, this can be more expensive than buying the property at full price!
Some work can be unexpected
It can be risky to buy a property that needs renovating. Sometimes, you find your new home needs more work doing than you originally thought.
It’s not until you start a project that you can find things lurking underneath that you hadn’t accounted for…
This is why it’s essential to find a reliable surveyor to check over the property. Would you buy a car for the same amount without getting it looked over first?
However, many buyers underestimate the importance of this. A mortgage-lender’s valuation is not the same as a survey.
Can end up paying for two homes
Depending on how serious the home improvements are, it may be impossible to live in the property while the work is going on.
This means many new homeowners have to rent at the same time. For some, this simply isn’t affordable. The alternative is to live in a building site while the work is being done. Are you willing to do this?
As well as being costly, renovating a property is time-consuming. Many projects overrun for longer than anticipated, which can place a strain on both work and personal life.
Sometimes, new homeowners underestimate what’s involved with a fixer-upper.
It’s a commitment
How long are you planning on staying in your new home? Often, a fixer-upper is a long-term commitment.
This isn’t always the situation some buyers want to find themselves in.
Also, it’s impossible to know for sure how long it takes to refurbish a house, as every situation is different.
DIY isn’t always the best option
To cut down on costs, many new homeowners choose to take on the projects themselves. Usually, these are the smaller ones. However, this isn’t always the case.
How to find fixer-upper homes
Despite the negatives, many hopeful buyers are still tempted by the sound of a fixer upper. So, how do you find one?
First and foremost, begin your search early. Consider multiple locations you’d be happy to live in to give yourself the best chance of finding the right home for you.
View as many houses as possible! During this stage, ensure you ask as many questions as possible, to both the seller and the estate agent. You want to know exactly what you’re getting into before you part with your money.
What to look for in a fixer-upper
How will you know when you’ve found the right home for you? Watch out for:
• Whether the surrounding homes are well-maintained
• Whether the renovations are cosmetic or structural (or both)
• How long the property has been on the market
• Whether you’re likely to see a return on investment
• If you have the time to renovate the property
• If you can afford to renovate the property
Can you include renovation costs in a mortgage?
Fixer-uppers can be cost effective due to the fact the mortgage you take out will be against the current property - not its potential.
So, you might be able to get a smaller mortgage compared to similar properties in the area.
However, it’s important to remember it can be more difficult to get a mortgage on a fixer-upper. Some properties are considered ‘unmortgageable’ if they’re deemed unsafe.
Here - you’ll need the right advisor to help you evaluate your options. Good advice is key to any successful move! We can provide you with free mortgage quotes from professional brokers. Get yours below.