How Can Expats Renovate Their Property in Australia?
Renovating your property in Australia can be an effective way to improve the living space, increase the value of your property, and personalise your property to your unique tastes and needs. Property renovations can be a personal DIY project or even involve professionals for more complex projects.
No matter which option you choose, it’s vital to budget smartly for your renovations to avoid unexpected expenses. Here are some things to keep in mind before renovating your property in Australia.
Understand how to use savings efficiently
First, prioritise your renovation projects based on importance. After that, get quotes from multiple contractors to compare prices. Look for cost-saving opportunities like using salvaged materials or buying second-hand fixtures.
Finally, be sure to set aside some of your savings for unexpected expenses.
Take advantage of government incentives
Several government programs in Australia provide financial assistance or incentives, either directly or indirectly, for property renovations. For example, the HomeBuilder Grant grants $25,000 to eligible owner-occupiers to substantially renovate an existing home.
These programs set by the Australian government have different eligibility requirements and restrictions, so it is important to research them thoroughly before applying.
Understand why it’s important to renovate
Renovating your property in Australia can bring a number of benefits, including:
Reduced vacancy periods: Renovating your property can make it more attractive to potential tenants, helping to reduce vacancy periods. An updated and modern property may appeal more to renters, particularly if it includes sought-after features such as air conditioning or outdoor space. By reducing vacancy periods, you can minimise the loss of rental income and ensure a steady cash flow from the property.
Higher rental yields: Renovating your investment property can also potentially increase rental yields, allowing you to charge a higher rent for a more desirable property. Improving your property’s overall condition and appeal can also attract higher-quality tenants willing to pay more for a well-maintained home. This can be particularly important as an Australian expat living overseas, as you may not be able to show the property to prospective tenants in person.
Increased tax deductions: You may be eligible for renovation tax deductions if you rent the property out. The deductions can include materials, labour, and other expenses incurred while renovating the property.
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Consider finance options for property renovations
Approaching a lender to finance your property renovation can save you from reaching for your savings immediately. Here are some finance options that are common in Australia:
Home Equity Loan: A home equity loan is a type of loan that allows you to borrow against the equity you have in your home. You can use the funds to pay for renovations, and the loan is typically repaid over a fixed period.
Line of Credit: A line of credit is similar to a home equity loan, but instead of receiving a lump sum, you can borrow funds up to a pre-approved credit limit as needed. The interest rate on a line of credit is typically variable, and you only pay interest on the amount you borrow.
Personal Loan: A personal loan is an unsecured loan that you can use for various purposes, including property renovations. Personal loans typically have a fixed interest rate and repayment term.
Credit Card: If you have an Australian credit card with a high credit limit, you can use it to finance your property renovations. However, credit cards typically have high interest rates, so you should only use this option if you can pay off the balance quickly.
Refinancing: If you have equity in your property and your current mortgage rate is higher than the current market rate, you can refinance your Australian mortgage and use the equity to pay for renovations.
Is it difficult for an Australian expat living overseas to obtain finance for renovation?
Obtaining finance as an Australian expat living overseas is not necessarily difficult but has its own challenges, such as:
Income and employment: Lenders need proof of your income and employment. As an expat, you may have different income streams, such as foreign income or rental income from an overseas property. You will need to provide documentation to support your income and employment, which may require more effort than if you were living in Australia.
Credit history: Lenders will also consider your credit history when assessing your loan application. As an expat, you may have a different credit history than if you were living in Australia, which could affect your ability to get finance. You may need to provide additional documentation to show your creditworthiness, such as bank statements or credit reports from overseas.
Currency exchange: If you are borrowing in Australian dollars but earning income in another currency, you may be exposed to currency exchange risks. For example, if you’re an Australian expat in Singapore, some lenders may consider only 80% of your Singaporean income while assessing your loan.
Lender policies: Finally, different lenders will have different policies and requirements for expat borrowers. It is important to do your research and compare lenders to find one that is willing to work with expats and meets your specific needs.
Speak with an expat mortgage broker
Working with a specialist expat mortgage broker can increase your chances of obtaining finance for renovations because they are better suited to help expats looking for financing in Australia.
If you’ve decided to finance your property renovation and want to know how to maximise your borrowing capacity, the Odin team can give you the best advice and suggest the most suitable financing options available to you.