Print Friendly and PDF

How to budget and pay for home improvements.

It's always challenging to stick to a budget, especially when you are doing home improvements for the first time.

31/01/2020

It's always a challenge to adhere to a budget. This is even more prevalent with home renovations, especially ones you are doing for the first time. In terms of home refurbishment costs, a detailed plan and extensive research are required in order to create a viable budget.

There are numerous things you need to take into account when planning your home refurbishment budget. It might not just be decorating costs. If you strip a wall back and find damp patches, for example, there may be additional repair costs. It’s always best to speak with an expert, once you have an idea of the improvements you’d like to make, to get an accurate quote.

It is also worth figuring out what projects offer the best return on investment before you dive into renovating your family room or kitchen. If you’re financially savvy, you may want to focus your money and resources on the improvements that are going to increase the overall value of the house the most. The big winners are kitchen refurbishments, fitted cellars, and dressings, which reflect 10-15%, according to CNN Money, of the overall value of your home. Bathrooms are just behind, accounting for 5 – 10% of the value of the house.

Of course, saving is the best option for funding home improvements but, in case you don’t have any funding for home renovation, a short term loan would work perfectly fine – as long as you only borrow what you can afford.

How much does renovation cost?

The average cost of renovating a house less is estimated at $18.347 per foot, according to HomeAdvisor. Therefore average cost of homes in the range from 3,000-4,000 square feet is $36,121. Renovations of older houses are usually more costly than new housing, especially, if the pipes, plumbing, and other elements are not roadworthy. You can normally expect to pay atleast $100 - $200 per square foot for these types of refurbishments. It is simpler and more economical to arrange projects by room estimate the cost of each individual project before you agree on your home refurbishing schedule.

How much should you spend on a home refurbishment?

Consider the value of your home as a whole in order to get an understanding of what your refurbishment budget should be. You don't want to waste 10-15% of the value of your house in a single room. If more is expended, the repair premium will not raise the home's value in comparison. For example, if your home is $100,000, you should spend a maximum of $15,000 on the renovation of the kitchen (based on a new kitchen increasing house value by 15%). If your house is worth more, you have more of a budget to play with.

Decide the financing before the budget is finalized

You need to decide how the work will be funded before you set the budget for your home renovation and you should keep the budget for your project within the boundaries of your available funds. When you know what you can afford to spend, set an additional expense of 10-20% of your available funds. It's significant. Something is going to go wrong or likely cost more than initially planned. Through setting a target before the outset, you know that you have the resources available to complete the project, regardless of what happens.

A personal loan can be a great option for people on a regular income. It gives you the cash upfront, with more manageable monthly repayments – allowing you to achieve your perfect home far quicker. Friendly Finance offer customers a free loan search to find credible lenders on the market and the money you need without the hassle of researching the funding options yourself.

How to fit everything in a budget?

Once you know your budget, place it into a savings and resist other forms of credit. This approach has two benefits. You can avoid costly fees for interest. Secondly, it is tempting to items you don’t need when you have credit available, whereas your budget will keep you focused on the project.

You can also make small changes to your daily life to contribute some funds toward your project. For example, turn the thermostat down, slash unnecessary expenses and avoid buying that new car! Any places where you can cut off the fat, will increase your budget and give you the extra touches for your renovation.

Remember, your home is probably the biggest investment you have, and you owe it to yourself to better it. Just take your time and be smart!

 

 

back to top