How to budget for a renovation

April 22, 2015
Melinda Halloran

Whether you want to update the look of your home or prepare it for sale, it’s wise to prepare a renovation budget before getting stuck in.

There are many hidden costs of renovating, so being prepared from the onset will help you to set goals and avoid expensive surprises along the way. When planning your budget for a renovation, ask yourself the following questions:

How will I fund the renovation?

There are a number of ways you can finance a renovation project. These include using your own savings, a loan top-up, refinancing your home loan or a construction loan.

Before you start making plans, determine the level of finance you have at your disposal. Once you have defined the figure that you need to stick to, you can work out what’s possible with your budget.

Have I considered all of the costs?

Depending upon the scale of your renovation, you may encounter costs such as council fees, architect or draftsman services, and bank costs if you are borrowing money or refinancing.

These things can be easy to miss in your initial budget, but they do add up quickly, so be sure to factor in all possible expenses before getting started. If you aren’t sure, talk to people who can give you advice for your project. Ask friends and family who have renovated before for their tips, or call up professionals in your area who can talk you through the process.

To prevent costs from blowing out during the renovation, ask for quotes in writing. This way you can see exactly what is included and you can allocate funds to any extras that aren’t. Request quotes from a number of tradespeople before making final decisions. By now you should have a good snapshot of your expected costs and whether these align with your budget.

What value will the renovation add? 

Once you know how much the renovation will cost you, consider how much value it is likely to add to your home. This is essential if you plan to access finance or sell once the renovation is complete – both you and your lender will want to ensure that the project will ultimately add value to the property.  

If you are looking to sell, think about what will appeal to buyers, not just your own tastes. Also consider paying attention to the kitchen and bathroom, as these rooms typically attract the greatest returns.

What happens when something goes wrong?

Hiccups along the way are inevitable – you may accidentally smash some expensive tiles or measure something incorrectly. The last thing you want is for these mishaps to blow your budget out. That is why smart renovators have a buffer to address these sorts of problems. As a guide, at least 10% of your total budget should be allocated to this.

Where can I reduce costs? 

To keep your costs down, consider the areas where you can make savings. Can you sand back the walls for the painter or, better still, paint them yourself? If you are willing to roll up your sleeves and help out with the renovations, you’ll be able to invest your money in other areas.

If you have the creative vision but need a little help with the money side of your renovation, I can talk you through your options and help you find the most cost-effective solution.

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