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 Upgrading an outdated kitchen, for example, is likely to increase the value of your property pretty significantly.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. Renovation calculators can also help you work out costs based on where you live, what you want to do and the quality of finishing you hope to achieve.
Step 3: Get across all the costs involved
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? Get your individual rate before applying in just a few minutes (it won't affect your credit score), or learn more about our renovation loans here. Couldn't find an answer to your questions? Give us a call on 1300 108 794. We're here to help.
This article provides you with factual information only, and is not intended to imply any recommendation about any financial product(s) or constitute tax advice. If you require financial or tax advice you should consult a licensed financial or tax adviser. Neither Pepper nor its related bodies, nor their directors, employees or agents accept any responsibility for loss or liability which may arise from accessing or reliance on any of the information contained in this article. For information about whether a Pepper loan may be suitable for you, call Pepper on 13 73 77.