Despite the rewarding benefits that come along with it, buying a house is a huge financial commitment. It takes careful planning and lots of house-hunting to find a home that is affordable and suitable for your unique needs.
It is mainly because of this reason why homebuyers, especially first-timers, decide to buy a fixer-upper house instead of a move-in ready. This type of house is usually available at a much lower purchase price and allows owners to renovate and decorate it in a way that matches their lifestyle and preferences.
However, these house renovations can be quite costly and time-consuming, increasing your chances of falling into a money pit that swallows up your money and free time.
Because this isn’t an easy decision to make lightly, we have written the ultimate guide outlining the main pros and cons of buying a fixer-upper house, especially if you are on a tight budget.
Pros of buying a fixer-upper house
More affordable
One of the greatest advantages of buying a fixer-upper house is that it has a much lower purchase price compared to move-in-ready properties. This can come especially in handy for homebuyers who are struggling to get their finances together and save for a house deposit and other related costs to buy a new home.
For instance, purchasing a move-in ready house in Canada can be expensive, but the country’s government offers special mortgage programs or homebuyer assistance to first-timers, which makes buying a property much easier. If you want to know more about it, click here to read more about the financial eligibility and other benefits homebuyers can get in Canada from purchasing a fixer-upper house.
Greater customization
The opportunity to renovate and design a home that suits your personal preferences and lifestyle is another great advantage that comes with buying a fixer-upper house. Whether you want a newly updated kitchen with an open outdoor space or want to rearrange the floor plan of the entire property, you can engage in various house renovation projects to create the home of your dreams.
Besides this freedom for customization, such renovating also gives you the opportunity to add value to the property. This means that you have the possibility of making a profit if you ever decide to sell the house, especially if you bought it below the market value.
Cons of buying a fixer-upper house
Renovations can be costly, long, and stressful
Probably the biggest drawback of purchasing a fixer-upper house is that the improvements can be costly. The property will most likely need to undergo major renovations which can lead to unforeseen problems and unplanned expenses that can really go over budget.
Besides this, the projects may take several months or even years to complete, prolonging your time of moving into your new home fast. Not only will this increase your spending, but it will also cause great stress to you and your family, no matter if you choose to take a DIY approach or hire contractors to do the job for you.
There is also the possibility of things going wrong even after the start of the renovations which can significantly increase the cost and timelines of your renovation projects.
Limited financing options
Another disadvantage of buying a fixer-upper house is the limited financing options you have available to purchase the property. Traditional mortgages don’t cover the home upgrades your fixer-upper must undergo, which means getting the funding you need to buy your new house and renovate it can be difficult.
There may be some specific loans available that cover home renovations, but these often come with restrictions as to which types of improvements and repairs you are allowed to do. This certainly makes it more difficult for you to figure out your monthly mortgage payment plan and can leave you stranded without funding for some vital projects.
Final thoughts
If you are thinking about buying a new home, but you are on a tight budget, then purchasing a fixer-upper house can be a great option for you. This type of house is sold at a much lower price because of the improvements it needs to undergo to make it habitable for you.
However, these renovations can be quite costly and time-consuming, leading to unplanned expenses and unforeseen problems that can delay your moving-in process. If you want to gain a better understanding of the matter, refer to our post and read about the main pros and cons of buying a fixer-upper house.
Source: Cover Photo: Flickr – Valerie Everett
