Article: Speak Easy

Renovation Loans  and Bad ’70s  Architecture with Michael BoturRenovation Loans and Bad ’70s Architecture with Michael Botur

If you’re like me and you’ve bought a nice cheap house with a ‘decorative’ Moorish double horseshoe arch-thing in the lounge, and after two years you’ve become sick of the pointless interior Moorish double horseshoe arch-thing, you may be after a renovation loan to get it ripped out and tossed into Whangarei Falls, never to return.

Will someone give me a loan to have the arch ripped out without the house falling down? Ripping it out won’t help my home become more eco-friendly, so the loan is unlikely. It’s easier to get a renovation loan if you’re improving your house’s sustainability. Incorporating sustainable features usually save you money on heating and power and adds to resale value, which makes banks salivate.

I told my wife yesterday I’d like to borrow money to have all our windows replaced with double glazed windows. She agreed with that, plus a couple extras: an entire new bedroom, plus a new kitchen, gutting my study, and a remodelled bathroom, and about a dozen other things, by which time I had tuned out, although I heard her agree the weird indescribable arch had to go.

Banks like to tack a renovation loan onto an existing mortgage if the renovations are likely to indisputably improve the house’s value, cut down on frequent maintenance, improve flow and living space and lighting. Banks are not keen on giving out renovation loans for unusual features or making the house harder to live in, such as by turning three bedrooms into two.  Banks also like you to carefully budget and plan whatever renos you’re doing and get reliable tradies on the job. Plus, you have to have the confidence of your insurer.

Because your bank will be worried about recuperating its money, the bank will insist you have a written contract for residential building work costing $30,000 or more (including GST). That’s compulsory before work starts. It protects you and ensures everyone is clear about what has been agreed upon – and what the dispute / conflict resolution options might be.

Renovation loans typically get approved for a full or maximum amount, and can be drawn down in instalments as the pool or second storey or extra bedroom gets built. Anything affecting the house’s structure needs council approval and some types of building require Code of Compliance Certificates.

Now, one thing that definitely increases your house’s value is adding a system that produces sustainable energy for your home. Usually we’re talking solar panels here. Some places like KiwiBank positively encourage sustainable energy loans with plenty of financial incentives if you’re looking at investing in solar power, wind energy, small scale hydroelectric power or geothermal power on a lifestyle block or farm.

It’s because the cost of renewable energy systems has come down in the past few years, meaning return on investment can be over 10% per annum (according to MySolarQuotes.) That ten percent is greater than most loan interest rates, meaning a solar system is well worth adding to a home loan. KiwiBank and NZ Home Loans are so keen on pushing solar loans that they even offer cashback gifts.

It’s not just about solar panels. EECA, the Energy Efficiency and Conservation Authority, offers Warm Up New Zealand: Healthy Homes grants for insulation retrofits to make homes warmer, drier and healthier. These grants, which take care of 50 per cent, or more, of the cost of insulation are available for low-income home owners and landlords with low-income tenants.

Anyway, back to loans: you’re likely to have a positive response to your renovation loan application if you’re getting a reputable company to put in your sustainable renovation. Good projects to bring into your house are:

• Underfloor hydronic heating, utilising solar panels
• Hot water heat pumps
• Energy efficient lighting (EECA Energywise may help pay for this)
There are also “Environmental loans” from banks like ANZ. These exist to help (usually farmers) invest in environmental systems, meaning more efficient usage of water and lighting.

Whether you own a home, lifestyle block or farm, there is always room for improvement. By the time I’m a millionaire world-famous author living in a mansion and I have sold my humble Tikipunga place, I’d like to leave it with improved heating and energy systems.

Michael Botur has published journalism in NZ Herald, Herald on Sunday, Sunday Star-Times and Mana and he writes a lot of fiction. He moved to Whangarei in 2015 and was ecstatic to be able to afford a house here.

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