5 Ways to Ease the Financial Pain of Renovating
The family home that seemed spacious when you had a baby on the way can quickly feel crowded once you have a couple of big kids and/or pets running around. If you want to create more space for your growing family, renovating can be the obvious solution, at least in theory.
But the reality of renovating your family home can be quite different to what you imagined. Living in a permanent dust bowl, washing dishes in the bathtub, and dealing with unhelpful tradespeople are often part and parcel of renovating, no matter how organised you are.
In addition, when renovating, it is not uncommon for costs to blow out. Unexpected expenses arise, sending the budget by the wayside.
And while the results are usually well worth the challenges you can’t always avoid many of the headaches that go with renovating. Thankfully, there are a few ways to lessen the financial pain.
Here are five ways to help ensure that your renovation doesn’t have a lasting impact on your finances.
1. Create a solid plan beforehand
Knowing exactly what you want to do before you get started can reduce the chances of your renovation going off course and resulting in extra costs. What is necessary for you and what would be nice but could maybe be done further down the track? The last thing you want is to start renovating and then realise half-way through that you actually want something completely different.
2. Get your finance right
Before you start calling builders or drawing up plans, you will need to determine how you are going to afford your renovation. Speak to your bank or mortgage broker to find out what your options are. Depending on your circumstances, you may be able to redraw any extra repayments you’ve made on your home loan in the past, or borrow more on your current loan to pay for your renovation.
Think carefully about how much you want to borrow – you want to make sure you can comfortably afford any repayments and have a bit of contingency in case your renovation goes over budget.
3. Be wary of overcapitalisation
It’s a good idea to get an independent valuation of your property before you get started. You want to avoid spending more on your renovation than it will add in terms of value to your property. Having a valuation done at the start can help you get a realistic idea of what you can and should spend for the maximum return.
Even if you aren’t planning to sell now, overcapitalising won’t look good on paper, which may make it difficult to get the finance you need to complete your renovation plans.
4. Create a budget
A budget is essential for any renovation. Once you know how much you can afford, think about all the costs involved and work out how much you want to spend. Without a budget, costs can quickly spiral out of control, leading to added stress and frustration. Remember to build a contingency into your budget to cover any unexpected expenses and delays.
5. Cut your living costs
It’s always a good idea to think about where you will live during your renovation. While you might be able to manage for a short period of time in a home that is like a building site, if you are undertaking major work and your kitchen and/or bathroom is likely to be out of action for a while you will probably need to stay somewhere else. A short-term rental can be a big drain on your budget so if you can, plan to stay with family or friends while the major work is being done.
Renovating can add value to your home and increase your standard of living, not to mention give you that bit more space to accommodate your growing family.
Hopefully these tips can help you get the finance you need and stay within your budget for a stress free renovation.
About the Author:
Jessica Darnbrough is the Head of Corporate Affairs at Mortgage Choice and is backed by more than 10 years of experience in journalism. In 2012, she was awarded Editor of the Year by Publishers Australia. Jessica’s primary focus is to help support and solidify the strong and professional brands of Mortgage Choice and Mortgage Choice Financial Planning. She also acts on a daily basis as a company spokesperson.
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