For many cultures, looking after elderly parents in your own family home is very important – and a preferred alternative to nursing home care. But how can you add a granny flat to your property without devaluing your property? And how can refinancing help you renovate and extend to support the care of your ageing parent or parents?
Examining the potential pros and cons of adding a granny flat on your property is a good way to explore your options and decide whether granny flat living is the right choice for your family. Getting a solid understanding of the complete construction and fit-out costs is a practical starting point and by talking to a trusted mortgage broker, you’ll also know what type of finance, or re-finance options are open to you
Adding a granny flat is an investment – and investments should be done with careful consideration.
Whether you’re planning a basic model, or splurging on a more spacious floorplan for around $200,000, how your granny flat impacts on the value of your main home is an important thing to think about.
For potential buyers, the addition of a granny flat can be the deal-maker. These days, with a growing number of people running home offices, it’s not just elderly in-laws or dependent adult children with disabilities who might need to be close to you – the benefit of having a self-contained space to enjoy peace and quiet to concentrate can also be attractive.
Still, you shouldn’t go into the creation of a granny flat just because you believe it will add value – in some cases, it could put people off buying your property.
What’s important, is how much it benefits your own lifestyle needs. If having a granny flat saves you other financial outlays and also offers peace of mind, then building a granny flat on your land could be the best thing you’ve ever done.
It’s important to be aware that, in Victoria, there are restrictions on who lives in granny flats, and on renting them out. For example, in some municipalities, granny flats can only be occupied by a person who is dependent on a resident in the main dwelling – typically a member of the family. Once that dependent person leaves, the granny flat cannot be rented out to any private tenant.
Councils can enforce these rules through the enforcement provisions of the Planning and Environment Act. In other states, including NSW and WA, renting out a granny flat is allowed.
Pros of Building a Granny Flat:
Looking After Your Family At Home – Whether it is a home for an elderly parent or a way to look after a dependent adult in your family, building a granny flat gives you the space to care for your loved one at home.
Saving Money – The costs associated with building a granny flat in your garden are usually significantly less than paying their way into nursing home care.
Cons of Building a Granny Flat:
It may not add value to the house – a well-designed granny flat can cost a lot to build but may not add much value to your house, if any. Why? Because although land and houses increase in value, granny flats don’t. For potential owner-occupiers looking to purchase your property one day, a granny flat might actually motivate them to look elsewhere.
Added family stress – if the reason behind building your granny flat is to house an elderly relative or relatives, or dependent relatives, be sure you understand what workload that really brings to you and your family. Working out how to offer safe, effective care for loved ones can be a motivating force in granny flat investment but when the reality of around-the-clock care becomes overwhelming, the alternative – placing your family member in professional care – may be better for both you and them.
Do Your Research
Just remember – talking to finance professionals, including your mortgage broker and your accountant, is a positive way to make an informed decision. Buying a granny flat can be done by refinancing using the equity in your home – and this could be a great financial decision for your family.
If you need advice for a personal loan, home loan, business or commercial loan, self-managed super fund loan, or an investment home loan, speak to a broker at Lending Specialists. We have a wealth of experience under our belt and a robust network to connect you to the right industry professional for the loan you need.