Upgrading a house increases its market value, which is one of the reasons why Irish homeowners are upgrading their houses. Of late, the market prices of houses have increased. The rising housing costs are one of the factors pushing people to choose renovation over moving out.
Nowadays, the government is even encouraging people to make energy-efficiency improvements and providing funding sources at very affordable interest rates. Upon comparing, upgrades are considered a way cheaper option than moving.
Reasons why homeowners are upgrading their homes
Here are the reasons why homeowners are upgrading their homes:
Rising housing costs
Ireland’s housing market is now quite expensive. This is because the supply is limited and the demand is high. This has made it challenging for people who are looking to move from one place to another.
Transaction costs such as stamp duty and legal fees also add significant costs of moving. This is also one of the deterrent factors. Some people do not move because they are emotionally connected to their house and the community. They prefer to stay there even if the house is no longer suitable.
Government incentives
The Irish government is providing various types of grants and benefits. The government has introduced various affordable funding options to help people make their houses energy efficient as an attempt to reduce carbon footprints. For instance, by installation of solar panels and double glazing, you will be able to reduce your energy bills.
Government-backed funding sources are way cheaper than home improvement loans. However, you can use them only to fund energy-efficiency improvements. If you use home renovation loans from direct lenders, you can use them for a wide range of renovation projects.
The government provides grants for solar panels, heat pumps, and insulation. Renewable technologies are not subject to higher VAT, which makes upgrades more affordable.
Energy efficiency and sustainability
Home improvement might seem a bit more expensive and a hassle to some people, but this helps save a lot of money in the long run. For instance, if you want to have solar panels installed, you will find them quite expensive, but you will be able to save money in the long run. For instance, with solar panel installation, you can slash your energy bills.
Energy-efficient houses provide comfort. You will feel healthier because your house will remain warmer in the cold season due to insulation. Your living condition will improve.
Financing and affordability
If you remortgage while moving out, it will cost you more money than what you pay on home improvement loans, especially if these loans are aimed at making it energy-efficient. Home improvement loans are low-cost loans. They make upgrades accessible without large upfront payments.
What does research say?
According to the survey, high mortgage rates are one of the biggest reasons why the Irish do not want to move. More than 50% of people have either already renovated their houses in the previous year or plan to do so in the year ahead.
According to the research from Compare the Market, the top reasons for preferring not to move out are the cost of moving, followed by the constant pressure of the cost of living and emotional attachment. 29% of participants blamed the high moving cost, 27% blamed the increased cost of living for their decision, and 27% said they were emotionally attached to their houses and neighbourhood.
However, the young population aged between 25 and 34 cited high mortgage rates as a factor in deciding to stay put.
Unexpectedly high bathroom and kitchen remodelling costs
Bathroom and kitchen renovations are very common. While the average spending on these renovation projects has been estimated at €15,000, people have claimed that they spend about €20,000.
There is no doubt that the government is offering affordable loans and schemes to encourage people to take energy-efficiency home improvements. Still, the survey has found that the bathroom renovation is the biggest reason, followed by garden transportation and kitchen remodelling. Energy efficiency and home tech installations ranked last.
Poor budgeting despite planning
Not all people are in favour of renovation. According to them, not all renovation costs could be planned. More than 80% of homeowners reported that they had encountered unexpected expenses during refurbishment. The cost of the material took them by surprise. Some people also reported that this had cost them more than they expected, as they had not checked their insurance.
Experts suggest that renovation is undoubtedly a smart move than relocating provided changes that you make are covered by your insurance. A lot of people, according to the research, found renovation expensive last year because they made changes that were never properly insured.
What things should you bear in mind while taking out home improvement loans?
If you are looking for renovation finance, you should keep the following things in mind:
• Make sure that you have carefully assessed the estimated cost of renovation. Check how much savings you have to cover the cost and how much you will need to borrow. Try to have a buffer to cover unexpected costs.
• Do not borrow more than you need. If you have enough savings, it is recommended that you avoid taking out a renovation loan.
• Compare interest rates because each lender charges different interest rates depending on their policy and your overall credit profile.
• Keep your credit score excellent if you want to improve your chances of qualifying for lower interest rates.
• Before taking up a refurbishment project, make sure that those changes align with insurance. Otherwise, you will be responsible for bearing the additional cost.
• Watch out for the repayment term while signing a loan agreement. A longer repayment term could be risky, especially if you have a mortgage to pay off.
The final word
Irish homeowners are preferring to upgrade their houses instead of relocating because the cost of living and moving are very high. If you have decided to renovate your house, you should still carefully assess your affordability.
