- Date : 24/02/2021
- Read: 6 mins
Read on for some valuable tips on how to set and stick to a budget for your home renovation
You’ve been living in your house for a long time, and it’s time for a big change. You might want to redo everything, including the kitchen sink. However, as with everything else in life, you have to stick to a budget. But how do you allocate funds judiciously for your home renovation project? We give you a few tips on how to do that, without overshooting your budget.
1. Determine why you want to do the renovation:
If you don’t know why you want the renovation done, you won’t have a clear idea of your needs or wants. It will then become difficult for you to set goals, both for the renovation and the budget. Since home renovations can cost a lot of money, having a clear idea why you want it and how much you are willing to spend for it will help you streamline the process and save time, money, and effort.
Related: When is it a good idea to take a top up home loan?
2. Talk to people who have done it
You might get a lot of advice from many different places, but you’ll get more relevant advice from someone who has done a similar renovation recently in terms of the nature of the renovation as well as the cost. You will also get the opportunity to learn from their mistakes, and get contacts of trusted local vendors and reliable contractors who can offer their best price.
3. Set up individual limits
Treat each room as an individual project. Ask yourself - why are you doing this renovation? If you’re doing it to make it liveable for a long time to come, you need to allocate more funds toward the rooms you’re going to spend the most time in. At the same time, keep the budget realistic – for example, spending a quarter of your renovation costs on the kitchen might not be a good idea.
Keep a hard cap for your budget, and don’t go over it at any cost. A good way to avoid this is to dissuade yourself from adding things to the project as you go along.
4. Keep an eye on the resale value
If you’re renovating the house to bring its value up with an eye on selling in within a few years, do research on what renovations or modifications will raise its value in the market. Avoid allocating a lot of your budget into things that will not have a positive effect on the resale value of your house. For example, avoid re-doing parts of your house unless it actually needs to be fixed. Remember, taste is after all a very subjective thing. The tiles and fittings and other furnishings that look snazzy to you may not appeal as much to a prospective buyer.
Related: An expert guide on how the price of a house is determined
5. Consider financing options
Home renovation budgets can run high. Will you need financing? If yes, shop around for options. Most banks will happily offer you a loan, but this may not suit your needs. You can opt for a loan against your house itself, since property is usually an appreciating asset, it will allow you to get a better deal, either in terms of the loan amount or interest rate, or both. A good credit score will go a long way in aiding the process.
6. Budget for surprises
Whatever budget you arrive at, add another 10-20% for “surprise” expenses. For example, you might find that the wiring in your walls needs changing, or the plumbing in the kitchen needs to be redone and can’t wait for another few years. It is better to have the funds ready and make a decision about it, rather than not have the funds and know that you’ll have to spend some more money in a short while to fix whatever is wrong.
7. Be frank with the contractor
This may not come easily to you, but it’s important to talk with the contractor frankly about your goals and budget. If they understand your needs and wants, they will be able to tailor the quote to suit your budget and taste.
8. Take bids from multiple contractors
To get the best deal, take bids from at multiple contractors (at least three), and don’t be shy about offering them a fee to come survey your house and give you a detailed quote on the work you need done. You’re asking them for their time and expertise, so it isn’t wrong to offer to pay for it. You might find that their quotes differ in certain areas; it will be an opportunity to educate yourself about the different approaches to the same work, and the good and bad points of each. If the difference is significant and can’t be matched by the contractor you prefer, maybe you can hire the one with the best quote for the specific work that you need done in that area of the house.
On the whole, though, it is better to stick to a single contractor because the quality of work and materials will be consistent. Don’t forget to ask them to include a detailed timetable of the work to be done, so that expectations are set early. Don’t rush the bidding process – this is a project that will affect the place you live in for at least a few years, so it is important that you don’t rush into a decision based on just one factor.
9. Cut costs wherever possible
You can try to cut the cost of your home renovation in multiple ways. For example, if you’ve got some skills as a handyman, don’t hesitate to do some of the work yourself. Not only will it save you some money, you will also get a sense of pride in contributing to the renovation of your home.
You can also sell anything you don’t need. This will raise funds for your home renovation, create space in your house, and leave you with fewer stuff to manage during your renovation. Can you make do with refurbishing appliances and cabinets instead of getting all-new ones? You might find that the wood used for the cabinets in the kitchen can last many years more, so why not just resurface them instead of swapping them out completely?
Related: How going green can save your money
Home renovation can be a very fulfilling project, but it is important to be clear with your goals and needs, and to keep your head firmly on your shoulders in the planning stage so it doesn’t turn out to be too much of a reach. A renovated home will bring you many years of joy through improving the quality of your life; managing to do it within your budget is simply the icing on the cake. Look at these 5 reasons to go for home loan refinance.
