6 costs to consider when setting a renovation budget
There are different ways to renovate which will affect how you manage costs. A builder with a contract means the cost is fixed. But if you choose to DIY, then you’ll need to manage the budget yourself. So let’s look at how to master your renovation.
Setting some money guidelines for your home improvements makes a lot of sense. A renovation budget shows how much cash you’ll need at various stages of the project, prevents the heartbreaking situation of having to put renovations on hold if you run short of funds and can be the deciding no vote against the $100,000 chandelier you once saw in a Taylor Swift video. Let’s take a look at the key costs (and blank spaces) you need to plan for in your renovation budget.
Building materials can be surprisingly expensive – and definitely worth budgeting for. Use the internet to shop around and compare prices, and above all, know exactly the quantities you need. Measure rooms carefully for things like floor coverings or tiles so you’re not wasting money on excess supplies or cutting yourself short by ordering insufficient quantities.
Good tradespeople don’t come cheap but you can trim the cost by getting quotes from a variety of different builders. Be very specific about the work you want done so that everyone is working off the same page when a quote is drawn up. Try to avoid changing plans midway through the project – this can seriously blow your budget.
If you’re doing all or part of the work yourself, don’t forget to include the cost of equipment hire. It can work out cheaper than buying gear that you may never use again.
4. Council permits and plans
It’s easy to overlook the cost of development applications (DAs) and other permits. Yet these can add several hundred dollars or more to your renovation budget. Speak to your council to know exactly what costs you’re up for to comply with local regulations.
5. Have a slush fund for emergencies
Renovating can dish up some surprises, and it pays to make allowance in your renovation budget for the occasional curve ball. The imported tiles you love may rise in price overnight, or the builder could hit a rock while excavating for retaining walls. Whatever the case, your renovation budget should include room for unexpected cost blowouts. Hopefully they’ll never happen, but at least you’ll be prepared if they do.
6. Weigh up your finance options
Part of setting a renovation budget involves weighing up the costs of funding your project. If you have cash savings, tapping into this nest egg lets you avoid interest charges. However, for larger renovation projects it may be essential to borrow funds and a number of options are available. A personal loan has the advantage of a fixed term, so you can easily budget for the regular repayments – but be sure to shop around for a competitive rate. Your home loan will almost certainly have the lowest interest rate of all types of debt, and drawing on home equity to fund renovations can be done by topping up your current loan or refinancing to a new home loan altogether. By paying a little extra off your loan each month, you’ll reduce the long-term interest charge of your renovations and pay off the debt sooner.
A well thought-out budget makes renovating easier
Drafting a renovation budget before you get started will give you a clear idea of the true cost of your project, helping you see if you can comfortably fund the works you have planned, and if necessary, show areas where you could cutback to make the renovation more affordable. This article is prepared based on general information. It does not take into account individual financial objectives or needs and is not financial product advice.