How To Set A Home Renovation Budget
How to set a home renovation budget? Planning the financial elements of your home renovation, can be somewhat more complex. If you have just bought a new house or have lived in one for some time, the easiest part of any home renovation is knowing what your goal is. Building a deck, segmenting a room or knocking down a wall are all easy to visualise as a finished product. The cost, not so. Below we outline five key steps you should take when you are planning your next home remodelling budget.
Estimate Home Renovation Costs
As a general rule, you should not spend any more on an individual room than the total value of that room as a percentage of your overall house value. It’s worth acquiring a rough value of your house and calculating the floor space of the room you want to renovate as a percentage of your total floor space before you begin. Also, remember that kitchen remodels tend to generate a return on investment of -50%. For every dollar you spend on a kitchen, the house value will only increase by 50c. Mid-range bathroom remodels offer the highest return on investment.
Consider Home Renovation Loan Options
Most people can’t afford a home remodel as an out of pocket expense. If you’re planning on borrowing money to help fund your home renovations there are a number of options you have.
- Refinancing. Depending on your arrangement with the bank, you might be able to refinance your mortgage at a lower rate which can reduce your monthly payments. The difference in repayments can be saved as capital that will be used towards your home renovation.
- Redraw facility. Some home loans have a redraw facility which allows you to withdraw payments you have made in the past as cash. If you’re ahead of your mortgage repayments then you may be able to use some of the equity of your home to finance a renovation.
- Personal Loan. Major banks and other lenders will be able to lend you money at a fixed or variable rate, depending on your income, assets and credit history. You will need a deposit to secure a loan for home renovations, so ensure you have savings ready before you apply!
Get Quotes From Contractors
You have to be very specific in your negotiations with contractors or they can and will charge you more based on what they think you want done. Be precise when describing the work you want complete, down to the materials used and the available timeframe. Get quotes from multiple contractors and don’t necessarily go for the lowest bid because the workmanship may be of a less than ideal quality.
Stick to the Renovation Plan
AS the renovation unfolds, you may be tempted to add on a small feature or change your mind regarding designs and styles at the last minute. Even minor changes to a construction contract can be costly to make, so consider carefully any last minute changes to your original home renovation plan.
Account For Hidden Costs During Renovation
It’s wise to cushion your investment with a 10-20% float in the event unforeseen circumstances arise during construction and cost you more than you had originally intended to spend. It’s rare that any home renovation project goes 100% smoothly so it’s best to plan to spend more than you actually will.
If you’re planning a home renovation, you should call the contractors at Archcon for a hassle free quote and over a decade of expertise. Archcon is fully licensed, certified and insured to complete all dream home renovations in Sydney. If you’re looking to begin your next home reno project, contact our team for a free consultation about your project and site inspection. The work will be done to code and your 100% satisfaction, so call between Monday and Friday, 8:00-5:00pm on (02) 8677 5787.