When it is come to renovate your residential or investment property, there are several ways which will impact on how you manage costs. If you are using a builder with a contract means the cost is fixed. But if you choose to DIY, then you'll need to manage the budget yourself. These tips will show you how to master your renovation.
As you may or may not aware, building materials can be surprisingly expensive and it is strongly recommended worth budgeting for before you commence. Use the internet to shop around and compare prices, and above all, know exactly the quantities you need. Measure rooms carefully for things like floor coverings or tiles so you're not wasting money on excess supplies or cutting yourself short by ordering insufficient quantities.
Good and reliable tradespeople don't come cheap but you can trim the cost by getting quotes from a variety of different builders. Be very specific about the work you want to be done so that everyone is working off the same page when a quote is drawn up. It is imperative to try avoiding changes in the plans midway during the project. If this occurs, this can seriously blow your budget.
If you've decided to do all or part of the work yourself, don't forget to include the cost of equipment hire for the project. It can work out cheaper than buying equipment that you may never use again. You can hire tools from Bunnings, Kennards, Cotes Hire, etc.
4 Council permits and plans
If there are structural changes involved it is important to obtain necessary permits and approvals of the plans from the local Council and original builders where applicable to avoid any warranty. It's easy to overlook the cost of development applications (DAs) and other permits. Yet these can add several hundred dollars or more to your renovation budget. Speak to your council to know exactly what costs you're up to comply with local regulations.
5 Have a slush fund for emergencies
Renovating can dish up some surprises, and it pays to make allowance in your renovation budget for the occasional curveball. The imported tiles you love may rise in price overnight, or the builder could hit a rock while excavating for retaining walls. Whatever the case, your renovation budget should include room for unexpected cost blowouts. Hopefully, they'll never happen, but at least you'll be prepared if they do.
6 Weigh up your finance options
Part of setting a renovation budget involves weighing up the costs of funding your project. If you have cash savings, tapping into this nest egg lets you avoid interest charges and refinancing of the existing mortgage.
However, for larger renovation projects it may be essential to borrow funds particularly for investment properties where there will be some upgrades required time to time. There is several options are available.
Your home loan will almost certainly have the lowest interest rate of all types of debt, and drawing on home equity to fund renovations can be done by topping up your current loan or refinancing to a new home loan altogether. Ideally, you do not want to borrow more than 80% loan to value ratio of the property to avoid Lender's Mortgage Insurance (LMI).
By paying a little extra off your loan each month, you'll reduce the long-term interest charge of your renovations and pay off the debt sooner.
If you need a small amount for the renovation project, a personal loan has the advantage of a fixed term, so you can easily budget for the regular repayments – but be sure to shop around for a competitive rate.
This information is general advice only and not intended for a specific individual or their financial circumstances. You may need professional advice from relevant areas if you are considering refinancing, renovations, building permits, etc. The original content is quoted from ME Shared Articles at https://www.mebank.com.au/the-feed/setting-a-renovation-budget/?utm_source=shareme3&utm_medium=email&utm_campaign=shareme&utm_content=shareme3_REFI