Equitable relationships
WORDS ANNETTE HARPER
Last week on Love Shack , George ’ s decision to add an unplanned $ 80,000 room to their renovation meant they had to come to me with hat in hand , requesting additional funds . I ’ m sure that particular situation led to a bit of uncertainty and probably some sleepless nights for the couple . But it ’ s not at all uncommon .
Home builders and renovators often need additional funds to cover budget blow outs , unexpected costs and changes in plans . It can seem intimidating at first to ask for more money , especially when you have already locked away your loan amount , but a good lender will always try to put you at ease . That ’ s why it is so important to keep the communication channels with your lender open . Not only will they ensure that any criteria or requirements are met , they will also figure out the best solution for you . In Bec and George ’ s case , their best option was to seek a new valuation that took into consideration the additional value the new room would add to their love shack . Well , the great news is that the room certainly does add extra value to their build . There ’ s just one catch . The valuation didn ’ t quite reach the $ 80,000 they needed in equity , coming in slightly short at only $ 70,000 . It is still a great result for Bec and George , who get to build their new room and realise their dreams . But they will need to make some sacrifices elsewhere in their budget .
If you find yourself in a similar situation , where your changes are outside of your budget , remember these few simple tips :
• Don ’ t over-capitalise . Be smart about how you add equity to your property .
• Always run your proposed plans by your lender first . They ’ ll be able to liaise with the valuer on your behalf .
• Include your builder or architect in the conversation , as they often have a great understanding of what builds equity and what is over-capitalising .
As for Bec and George , now it ’ s all down to their ability to find $ 10,000 worth of savings in their build . What will they sacrifice ? I ’ m sure they each have their own ideas about where it can be saved and , as is often the case , they ’ re probably eying off each other ’ s budgets to find the money . I can just hear George telling Bec to buy cheaper décor , and Bec telling George to get his paint brush out of retirement and start painting the walls himself . As much as I love helping them out , this is one decision they will have to make for themselves . I look forward to seeing what solution they come up with next week .
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