AMP’s Sandy Maxwell tries to create his dream home


Thinking of renovating? You’re not alone. Sometimes it can feel as though the whole country is busy demolishing, sawing, painting, tiling, bricklaying…

While new builds attract the bulk of our dollar spend, renovations are increasingly popular, perhaps reflecting a desire to fortify our castle defences from all the COVID craziness out there.

In the March 2021 quarter, Australians spent $16.2bn on new residential building work, an increase of 4.8%. And alterations or additions were up 11.4% to $2.9bn1.

That’s despite – or perhaps because of – the coronavirus effect. Those of us lucky enough not to have taken a financial hit have been stuck in our suburbs looking for ways to pass the time.

Here in Melbourne at the heart of the COVID storm and with nowhere else to go, the beach path is rammed. The pavements outside the local cafes are crowded. And every street seems to have at least one new build on the go. One small cul-de-sac has even been home to the Block for the past six months. At times it can seem as though the suburb is one big building site.

With so many avenues to spend our money closed off for the past 18 months, it’s either renovating your home or embracing your inner online shopper. And that way madness lies…

Taking the plunge

So like many of our fellow Australians we dusted off our renovation plans and set to making the dream a reality. If you’re thinking of joining the renovation nation, here are a few things we’ve learned along the way. 

  1. Do your homework on loans. In some ways construction loans are similar to other types of home loan you might be more familiar with. A lender such as AMP Bank will assess the property’s value to see how much you can borrow and look at your income to check you can meet the repayments. Once approved, the loan usually goes up in instalments as the build proceeds – these can vary from relatively modest payments for restumping to a substantial instalment at lock-up. You only pay interest on the principal until the full amount of the loan is taken out, at which point it switches to a conventional home loan where you pay off the principal and interest.
  2. Choose your builder carefully. Think about what type of renovation you’re after. If it’s a really piecemeal job then not every builder will have the patience. Have they done similar renovations or do they specialise in other types of build? Are they fully certified and insured? Have they worked on other builds in the area that you could check out?
  3. Decide who’s wearing the hardhat. For some couples it works if both partners have an equal say. For others it can work best for the less well-informed partner to take a back seat and let their other half drive discussions. Can you see where I’m leading with this? OK, I’ll come clean. After the first few meetings my role was largely that of glorified teaboy. Having said that, I was called into play for some crucial decisions. The exact shade of render for the front, the width of the floorboards and even the oven door configuration…turns out my savant expertise apparently extends into most areas of the house.
  4. Embrace the red tape. Here’s the bad news up front. Yes, the paperwork is endless. Planning permit, building permit, structural engineers report, tree works permit…even an asset protection permit (with hefty deposit) in case the nature strip is damaged….the forms just keep on coming. And no, there are no short cuts. One option is to rail against The Man for putting you through this bureaucratic obstacle course. A more mature response that’s better for your sanity could be to work through it all methodically and try to simply treat it all as part of the process, form by form. When it comes to the red tape, park your emotions outside as it’s easy to get frustrated. Tell yourself it will all come to an end…one day.
  5. Appoint a project manager. If you’re going through a bigger builder they could manage the project as part of their package. If you’re engaging a more boutique operator, you could manage the project yourself instead of paying your architect. While this could save on fees, it’s also time and effort on your part.
  6. Build relationships. With all the forms to fill out in triplicate, it’s easy to get bogged down in bureaucratic negativity and start treating every encounter in an adversarial way. But what do bankers, builders, architects – heck even council managers in charge of approvals – all have in common? Yup, that’s right. They are all people…and people you can build relationships with. Fortunately my partner works in the law. So she knows the value of negotiating mutually advantageous outcomes. If it was up to me, we’d probably have burned through three architects and five builders by now. 
  7. Scope out ALL the costs. Surveyors, architects, builders, arborists, removalists…they all want their pound of flesh. One big thing we didn’t quite budget for was finding a rental property for 12 months while we moved out. When the penny dropped that we’d need an extra $40K or so, we started to panic. Luckily we were bailed out by the in-laws and we’ve been able to stay with them nearby – and embrace the joys of multi-generational living – but not everyone will have that option. If you want to stay in the same suburb with easy access to schools and amenities, you could pay a premium.
  8. Sweat the small stuff. If you put the hard yards into the building contract up front, you can minimise potential issues and disputes. If you rush things and then try and make decisions on the fly, every time you adjust something, however small, you could be hit with a variation cost. So yes, it’s worth having that chat about the power points in the downstairs study sooner rather than later.
  9. Scrutinise the building contract. There are few crucial things to look out for, like when payments are scheduled. Your builder might understandably prefer to be paid in advance. But frontloading the payments means you’ll be shelling out before the work’s done. So you could be on the hook if something goes wrong. If you’re not sure, get your architect or a legal expert to check.
  10. Decide what’s worth breaking the budget over. Everyone’s different. Some people really value a swish kitchen, while others will want to allocate more of their budget to the bedroom fittings, lighting or even fancy electricals for a movie room. We decided we could probably live without the granite benchtops. But there didn’t seem much point in building a new bathroom, only to fill it with the cheapest tapware that wasn’t much of an improvement. So we went a bit more upmarket with the bath and shower fittings.
  11. Allow a bit extra. A good rule of thumb is to allow about 10% extra for contingencies, particularly if you’re renovating an older property. Apparently our place is situated on a water table, meaning more time and expense getting approvals. Who knew? Also it had a lot of TLC from a DIY fanatic back in the day. And while they clearly did a much better job than I could ever do (hammering in a nail is about the extent of my DIY powers and every time I go to Bunnings I break into a cold sweat), they did a much worse job than…I don’t know…an actual proper builder. So pretty much everything this guy touched has had to be redone. So far we’ve had dodgy stumps to repair, dodgy crossbeams to take down and dodgy sewer lines to rebuild.
  12. Allow more time. We naively thought we’d be done and dusted in 12 months or so, but it’s now been well over two-and-a-half years since our first conversation with the architect. And we’re still probably nine months from completion. Looking around the ‘hood, that’s about par for the course. The building work on a neighbours’ place took at least two years from go to whoa. So it pays to play the long game.

When you renovate it helps to roll with the punches. There are good days and bad days. Supply chain issues, lockdown go-slows and, at the time of writing, a state-wide shutdown for the construction industry have all been sent to try us. But when you see the frame going up and you start to see your vision taking shape, you remember why you got yourselves into this in the first place.

So if you’re thinking of rolling out those renovation plans, make sure you know what you’re getting in for. My advice? Strap yourselves in, it’s going to be a wild ride.

AMP Bank construction loan

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