Kickstarting your home renovation project: How to plan and budget

Kickstarting your home renovation project: How to plan and budget

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  Renovation costs  |    Renovation finance  |    How to plan  Top tips


Renovating can breathe new life into your property without the hassle of relocating or moving to a new area. Plus, it can be a lot of fun and something to be proud of – after all, you’ll be designing and co-creating the place you call home.


How much money do I need to renovate a house?

This depends entirely on the scope of the renovation. Are you doing just one room, adding a new kitchen, or undertaking a large extension and building an additional floor or extension?

Renovating a kitchen or bathroom can start at $10,000 – $15,000 and go up substantially depending on the size of the room and chosen finishes. Don’t forget, if you manage to source cheap cabinets or fittings you’ll still need to get them installed by a professional.

It’s important to decide how you want to pay for your renovation, as it will impact the overall cost and availability of funds. Will you take out a personal loan, refinance, or use your savings?

Ways to finance a home renovation

A personal loan

To help finance small or medium renovations, you could take out a personal loan. Typically, you can borrow from as little as $5,000 up to $50,000 – which could be great if you want to spruce up a bathroom or kitchen. Although unsecured personal loans usually come with a higher interest rate than a home loan, taking out a personal loan could usually be quicker and easier than refinancing your existing home loan.


If you’ve been in your property for a while, you may be able to refinance your home loan, allowing you to tap into your equity. A quick refresh - equity is the difference between your outstanding loan balance and the current lender assessed value of your property. Subject to a lender’s criteria, you may be able to refinance up to 80% of the value of your property to pay for renovations.

Refinancing your home loan could allow you to pay for your renovation at home loan interest rates which would usually be more competitive than the interest rates charged on an unsecured personal loan.

There are two common ways you can use refinancing to fund your renovation; either for cash out or progress payments.

Cash-out could be an option for smaller renovations that you’d otherwise take out a personal loan for, like renovating a kitchen or bathroom. With ‘cash-out’ you’ll have cash funds to pay the builders or purchase accessories as you need

Renovating using progress payments would be more suited to larger projects that require structural work, such as extensions. This is because the lender will want to monitor progress on the build, ensuring that the project isn’t going to devalue the value of your property. Your lender will pay the builder directly when progress payments are used.

How to pay for renovations using savings


The other option is to pay for renovations using your savings. While this might seem like ‘free’ finance, in that you won’t pay interest on loan, it’s always important to factor in the opportunity cost of your savings. A way to do this would be to compare the income or interest you could receive on your savings compared to that charged on a loan. If the interest and fees paid on a loan is lower than what you could earn from your savings, then you may want to consider keeping your savings and taking out a loan instead.

How to plan your 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.

1. Scope your project

Before you get out the sledgehammer or order a kitchen benchtop, it’s best to take the time to think through everything you may need. Do you already have products in mind – if so, is there a lead-time attached, or are they in stock? Can your renovations rely on DIY, or will you need licenced tradies to do the job? Equally, with larger renovations, you may need council or strata or lender approval. All these take time, so it’s crucial to get everything co-ordinated before getting started.

2. Plan your renovation budget

If you’re using a loan for your renovation, then chances are you’re taking on a bigger project, so planning and budgeting will be key. Depending on your priorities and the complexity of the renovation, you can also encounter unexpected expenses such as electrician and plumbing costs.

And one more thing - it could be a good idea to plan in an extra buffer on top of your budget to cover unforeseen costs.

3. Look for peer support

There’s no harm in asking for help or seeking guidance. And if you don’t have a seasoned renovator in your family or friendship group, you could turn to online forums (such as Australia’s Renovate Forum) to seek advice. You’ll be amazed at the wealth of knowledge offered up – and they may even offer you that extra bit of inspiration you hadn’t thought of.

4. Quote and compare

It’s a good idea to ask suppliers to provide a breakdown of labour and material costs so you can see where any potential savings might be found.

5. Don't forget a plan B

Plan everything – and it’s good to have a contingency. It can help to have an alternative if one part of your plan can’t go ahead. You’ll be able to quickly adapt and re-route your renovation to plan B.

Your initial idea might change or grow along the way as you get quotes from professionals, scope out materials and begin the loan approval process (if needed).

Tips on how to renovate on a budget

If you just want to lightly refresh your home space, you could consider some of these ideas to renovate on a budget.

The power of paint
1. The power of paint

This is one of the cheapest ways you can improve your home - it'll freshen up tired rooms to look new again, and could potentially help you achieve a higher valuation. What’s more, it can totally change the ambience of your key living areas. However, if you decide to hire professional painters, it can get pricey, with a 2-bedroom costing approx $2,500 to $3,500 to paint.

Replace small fixtures and fittings
2. Replace small fixtures and fittings

This is a way to quickly spruce up your home without spending too much. Replacing tired or worn taps, doorknobs or handles can breathe new life into a room without breaking the bank. Or, if you were wanting to re-decorate, you can quickly change the style of a room from rustic to modern through new door handles and finishes.

3. Accentuate with accessories

After that fresh coat of paint, what better way to breathe new life into a space than freshen up with new accessories. Plush pillows, stunning mirrors and artwork or indoor plants can breathe new life into a dated interior without breaking the bank.

4. Don’t be afraid of marketplace

Not everything has to be bought new! Shop around to see what options you can find for either used or ex-demo furniture. You may be able to achieve your desired look at a fraction of the cost.

Pepper Money can help

Once you've decided on the key focus of your renovation and have planned and budgeted accordingly, then it could be time to kick-off home renovation loan options.

You can speak with one of our lending specialists on 137 377 to talk through your real-life situation and Pepper Money options.