Renovations are great for a change of scenery, update old facilities and most importantly, provide an increase in the value of your home. That value, however, can be severely diminished if you end up spending more than your finances can handle.
With that in mind we, at Oneflare, have put together a guide on how to budget for renovations, so that you do not end up breaking the bank.
As a rule, you should not spend any more on a single room than the value of the room as a percentage of your overall house value. To do this, you will of course, first need to get an estimate of your home’s value.
For instance, if your house’s overall value is $66,000, (the median Australian house price) and you want to renovate your kitchen, which accounts for between 10-15% of your property’s value, then you should aim to spend under $66,000 on your renovation.
It’s also worth keeping in mind that some rooms scale to add more value than others. For instance, while the kitchen is often cited as the make or break room, it offers amongst the lowest return on investment, whereas a moderate bathroom makeover can almost double the money spent.
Look at loan options
If you’re borrowing money for your project, make sure you look at what deals are available and what types of loan will work for you. It might seem like common sense, but taking the time now to research your options and ensure that you’re choosing an option that will work for you, will save you money down the line.
Oneflare have a number of registered accountants who can provide you with the financial advice you need to make an informed decision.
Research quotes from contractors
Talking to a professional is the fastest and often the most accurate way to assess the total cost of a project. Oneflare lists thousands of professionals across a wide range of categories who can help you complete tasks. Their experience and understanding of the finer aspects of a renovation are invaluable for accurately assessing the cost of a project. Find a professional home renovator for your next project.
Follow the plan
While you’re in the middle of a renovation, it can be easy to get caught up in the excitement of a project and start thinking about other ways you can add value to your home. Always remember to take a step back and see how these changes would affect your budget and timeline. Reviewing the plan is the best way to avoid blowing your budget as even small additions to a project can carry unexpected costs.
Create a buffer
As mentioned in our article on the most common renovation mistakes, you should always include a buffer in your budget. It only needs to be 10% of the total cost of the renovation, however, that 10% can make all the difference in the event of accidents or other setbacks outside of your control. Rather than having to dip into your savings or borrow extra money, using your buffer can save you money in the long run.
Renovations can be a fantastic investment for your home. By starting with a smart, well-researched budget, you can ensure that your project will be completed smoothly and without any nasty surprises.