Advice on next step

Ok so i'm looking for a bit of advice on which way i should go. I'm self employed which made it a bit of a struggle to get a loan on my current PPOR at a decent rate. We have been in this house for about 1.5 years now and still owe 225k. We had the house valued last week and it came back at 410k.

This is where i need the advice. Should i remortgage and spend 50k on the PPOR (Kitchen, Floorings, Bathroom's) As it stands it was built in the early 90's and everything is original so any reno's can only increase the value right? Then in another 12-18months time look at using the equity to purchase an investment.

Or

Do i remortgage and use the equity i have now to get an investment property.

Any help would be appreciated

 

No. This doesn't make good financial sense to me.

Early 90s isn't that old, so everything should still be okay, if a little dated.

You'd be much better off getting an IP and potentially renovating that if needed. Unlike renovating a PPOR, these costs will be tax deductible and will increase your income.

Speak to a mortgage broker exactly on what your situation in regards of borrowing is like. There are many good brokers on here.

 

Of these, based on that limited info, i'd choose option B. But can you tell us your income, & how much money you can save every month? Do you have dependents?
With this info the answer may be clearer.

Also, I wouldnt touch the PPOR, just let the market increase the value of your home without outlaying any money. I do want to say that even a 10k reno job can go quite far. There's no need to pay anywhere near 50k for that work you outlined.

 

50k was probably a bit of an over estimate on costs. I could do a lot of the work myself. Kitchen is the main thing that needs doing as its very small and very dated. Also the missus is screaming for a dishwasher.

The main reason i was thinking of doing a full reno was the real estate agent who was around last week said if we were to put in a new kitchen, Flooring up stairs, and redo one of the bath rooms she would put it up around the 500k range rather than 410k.

Income is about 120k with 3 dependents.

 

Here are some pics from when we purchased it. The bar thing on the right hand side of the kitchen pic is gone and a new shower screen has been put on. Also we have put in a new stove.

 

I also should have mentioned that this property is just in my name. With the wife going back to work mid this year we were planning on looking at an investment early next year as we didn't think the valuation would come back so high.

 

The issue that i had was i hadn't been in business for 2 years which is what most of the lenders wanted. Because of this the first rate i was offered was 9.7% then 7.8% then 6.4% untill i finally got offered 4.89%

Iv been running now for about 3 years so it should be easier i'm hoping next time round.

 

That kitchen and bathroom look like perfect cosmetic Reno candidates - a bit of paint will go a very long way. Tile paint is awesome and you
could probably update both for a couple of hundred bucks.

Paint the lamainate in the kitchen and put on some new handles.

 

You can do all these renovations, but just be very clear that it has nothing to do with investing if you choose to do so.

 

Tidy up the place with a low cost reno if this isn't your dream home - getting the best bang for buck. Whilst a real estate agent might give you a nice high estimate, valuers are no where near as nice. Alternatively if this is your dream home, save up the money preferably and spend until your heart is content.

Then you can draw from the equity as needed and invest in property from there.

 

My vote is to spend a bit on the kitchen (dishwasher being a priority - happy wife, happy life!) and the PPOR in general so you all feel happy and full of joy, but invest the majority of the funds available in an IP. Much better outcome, I reckon

 

and an accountant! renovation costs are generally NOT tax deductible. They can give you depreciation benefits though.