• How to budget for a home renovation

    How to budget for a home renovation

    Budgeting is one of the most important elements of a home renovation project and whilst you might have a scrap-book full of exciting ideas, it’s really important to start off on the right foot.

    Unfortunately, it starts with the B-word… BUDGET!.

    I always encourage renovators to talk to a real estate agent about how much your property is worth now and how much value a renovation might add. Look at recent sales data and start attending some auctions to support your understanding of what the renovation could potentially be worth to a buyer.

    It is also important to consider whether you plan to sell the property in the short term or continue living there for some period. I always like to know that if I need to sell, that my property is worth at least what I have invested in it.

    Like most of us, you will more than likely need to speak with a lender about how much you could potentially borrow. This should be done early in the process before you get in too deep.

    It is also a good idea to speak with a financial advisor about your capacity to repay a loan, knowing that you can afford to enjoy your newly renovated property.

    Once these steps are complete, the fun can start!

    Talk with an architect to understand what’s possible within your budget, breaking down your dream home as a list of mandatory inclusions and then some optional, nice-to-have inclusions. Being pragmatic up front, means that your architect can determine where to direct their focus and start developing conceptual plans that are realistic to what you can afford. A good architect will also be able to outline options that may maximise or extend your budget.

    As your plans take shape on paper, it’s worth double checking these with a builder, even if it is only in an informal capacity. Your architect should be able to give you some guidance here too, but no point in paying for plans that you cannot afford to build.

    Some final choices in cabinetry and finishes can wait until later, but determining the floor-plan and the building materials to be used will need to be resolved as part of the design stage and before submitting plans to Council.

    Once plans have been approved, it is time to obtain final building quotes. Make sure your final budget includes an allocation of funds for ‘contingency’, such as replacement of outdated electrical wiring, structural issues, asbestos removal to name a few. This is particularly important when renovating older homes.

    Consider using a Quantity Surveyor to check and compare builder’s quotes. Quantity Surveyors are experts in building cost estimations and can easily identify any inconsistencies or irregularities in quotes, so you know exactly what is being proposed.


    About the author

    • Cameron Frazer

      Cameron Frazer from Archicentre is on hand to help avoid thousands of dollars on costly repairs that can turn that dream home into a nightmare. As our resident architect, Cameron, will show buyers what to look for and the questions to ask when purchasing a property, and how to get the right professional help for your renovation or building project.

      With over 20 years of experience in design, construction, project management and sustainability, Cameron has led significant architectural projects in the private and public sectors. He will also look at how to assess a property, consider the potential renovation costs and how to best unlock future capital growth.

      Cameron Frazer

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  • Disclaimer:

    The information here is of a general nature only and is not intended to constitute financial or tax advice. You should consult your professional adviser, accountant or taxation expert for advice specific to your personal circumstances.

    The views and opinions expressed in this article are those of the author alone and do not necessarily represent the views or opinions of RAMS Financial Group Pty Ltd ABN 30 105 207 538 (RAMS),  Westpac Banking Corporation ABN 33 007 457 141 (Westpac) or their related bodies corporate. This article is strictly for information purposes only and neither RAMS, Westpac nor any of their related bodies corporate make any representation as to the accuracy or completeness of the information in this article or endorse the views expressed in it.