5 steps to work out your renovation budget

a picture of a couple planning for their home renovation

Renovating a home is exciting but it can also feel a bit daunting. After all, you want to create your dream home without breaking the bank. That’s why it’s important to have a realistic idea of what things will cost before you start swinging the hammer.

Here are five steps to help you work out your budget.

Step 1: Decide on the scope

Renovations can be large or small, expensive or cheap. The first step when setting your budget is deciding exactly what you want to achieve. Start with a list of the must-haves, as well as what would be nice to have if your budget allowed for it.

If you’re renovating on a tight budget, focus on renovating the areas that will add the most value. Upgrading an outdated kitchen, for example, is likely to increase the value of your property pretty significantly. There are also plenty of DIY jobs you can do to give your home a great makeover on a budget, find out here.

Step 2: Do your research and use every tool at your disposal

There’s no need to reinvent the wheel when putting together a renovation budget. Tap into your personal network and find out about their experiences with home improvements – you might be surprised by their useful recommendations.

When it comes to online tools, Renovate Forum is Australia’s largest online renovation community where you can share advice and read up on experts' opinions. There are also plenty of DIY jobs you can do to give your home a makeover on a budget – check out our top 4 ways to upgrade your home on a budget.

Apart from the standard cost of contractors and materials, there are some other fees you should be aware of. If your renovation requires council approval, for example, you might need to fork out for certification fees.

For larger renovation jobs, it's pretty likely you will need to factor in some specialist costs, particularly if you have to excavate, demolish or level the land before building can start. If the job will take a significant amount of time, temporary fencing and portable toilets might need to be added to your expenses. Depending on your priorities and the complexity of the renovation, you can also encounter unexpected costs when rewiring electricals and insulating your new structure.

Step 4: Shop around for quotes

Once you settle on how much you can afford, it’s time to get an official quote. It’s always a good idea to shop around and collect detailed cost estimates from different contractors – that way you can compare quotes and negotiate the best possible price.

It’s also important to read the fine print on every contract before signing, or get some legal advice if necessary. The Fair Trading Government Agency in your state may be able to offer advice to make sure you are only dealing with a licenced tradesman.

Step 5: Have a contingency plan

Once you’re happy with a quote, it’s a good idea to add at least five per cent to the total estimate. With a bit of wiggle room, you’re covered for any unforeseen expenses that may crop up during or after the renovation.

You can also discuss the option of being billed in stages as the work progresses, rather than a lump sum upon completion. If your contractor agrees, consider setting an expenditure cap for each stage of the renovation and discuss any budget deviations as you go.

If you need help getting some funds for your renovation projects, Pepper Money personal loans could be an option. Our loan amount starts from $5,000 and this can be used to boost your existing renovation budget or help get the smaller renovation projects underway!

Ready to get started? Find out how much your individual rate and repayments might be here before applying in just a few minutes, (and it won't affect your credit score).

Got a question? Call us on 1300 108 794. We're here to help.

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