Personal Finance

How to financially prepare for your next renovation

Renovations can be great for adding value to your property. Learn more about how much they cost and how to fund them.
How to financially prepare for your next renovation

Renovations can be great for adding value to your property, updating the look and feel of your living spaces, and making your home better suited to your current needs. Whether you're planning to focus on revamping a single room or are wanting to completely overhaul your house, renovations can be a costly exercise. Before you get started, learn more about how much renovations cost, how to fund your renovations and more.

How much do home renovations cost?

Asking how much home renovations cost is much the same as asking how long a piece of string is. It depends on many different factors, from the size of the area and the extent of the renovation to how much you can do yourself and what needs to be done by professional builders. If you're wanting to update a room with new flooring and a fresh coat of paint, it'd likely be cheaper than removing walls, replacing appliances and buying new furniture.

On average, you can expect to pay between $10,000 and $45,000 to renovate a kitchen, with the cost including labour, appliances and a variety of fittings. Additional costs could include flooring and changes to window and wall positions.

Bathroom renovations average between $10,000 and $35,000, with costs including labour, tiling and bathroom fixtures.

The cost of bedroom renovations can vary greatly depending on the size of the room and whether walk-in robes, ensuites and other features are incorporated into the design. They can average anywhere between $2,000 and $35,000 in total.

Living rooms are typically cheaper to renovate than most other areas of the home, with average costs coming in at between $10,000 and $15,000. This figure would likely include the cost of labour, flooring and furniture.

The expenses involved in renovating outdoor areas can also vary, with detailed landscaping and the construction of a deck costing more than simply laying turf and filling a few garden beds. Expect to pay anywhere from $2,000 to $10,000 to renovate your garden.

How can you prepare yourself for unexpected costs while renovating?

As hard as we may try to plan for every eventuality, we can't always predict what will happen during a renovation. Whether your chosen materials are no longer available and you need to select a more expensive option to achieve the same look you're going for, or if additional structural work needs to be done to ensure the safety of your home, it's good to have little extra cash set aside.

The best place to start is to figure out roughly how much the total renovation will cost. You'll need to request quotes from several different contractors to find the best prices on labour, estimate how much any raw materials will cost and also look into what appliances, furniture and other extras you'll need. Once you've worked out an estimate of how much your renovation will cost, it's recommended that you factor in an additional 10% to 15% to ensure you're covered for any unexpected expenses that may arise.

If you're thinking of taking out a renovation loan to cover the costs, it can be a good idea to borrow slightly more than you think you need. If you're saving up to pay with cash, raising your saving goal a little higher can be worth the extra effort in the long run.

How can you fund your home renovation?

If you're ready to renovate your home, you'll need the funds on hand to pay contractors, buy building materials and cover other costs. There are several ways that you may choose to fund your home renovation, from personal loans to purpose-built renovation loans. Learn more about some of the options available:

Making use of your home's equity

If you're currently paying off a home loan, you may be able to make use of your home's equity to help you finance your renovation plans. The difference between the current value of your home and the amount of money left to pay off on your home loan, equity can sometimes allow you to borrow additional funds that you can then use to cover the cost of your planned renovations. The amount of equity available does vary and it is important to note that you may not have enough to cover the expenses of your entire renovation. It's best to talk with your lender about your options.

Construction loans

Sometimes known as a renovation loan, a construction loan is quite similar to a home equity loan. The main point of difference, however, is that the post-renovation value of your home is also taken into consideration by the lender. Instead of being provided with the complete loan amount upfront, you'll receive the renovation loan in smaller increments over a set period of time.

Personal loans

If you're planning to make smaller renovations around your home or intend to focus on revamping a single area at a time, personal loans can be a convenient way to fund your project. In most cases, loans are processed quite quickly, but you are limited by the maximum lending amount. Interest rates will vary depending on the type of loan you choose (secured or unsecured), the lender and your credit history, so be sure to keep this in mind when searching for the best renovation loan for your needs.

Credit cards

If you'll only be making small improvements to your home, using a credit card could be another alternative to taking out a home improvement loan. You'll have the freedom to spend up to your credit limit once you receive the card and can use it to pay for non-renovation related expenses too. Interest rates tend to be quite high, so take this into consideration before deciding if it's the right option for you.

HomeBuilder Grant

Until the 31st of March 2021, the Australian Government is also offering homeowners a grant of up to $15,000 to help them substantially renovate an existing dwelling. Although an eligibility criteria must be met, the HomeBuilder Grant can be used to improve the safety, liveability and accessibility of the property.

Why should you renovate for longevity?

Although the latest design trends might appeal to you now, choosing to renovate for longevity can help you get more from your investment in the long term. When planning your renovations and the style of each room, it's a good idea to consider starting with a neutral base in bathrooms, kitchens, bedrooms and living rooms. Although this might not be the most exciting prospect, especially when the latest trends call for the use of plenty of colour and texture, it may make it easier to update each space if your tastes change. A neutral base can be brought up to trend with new fixtures, accessories and decor, while completely changing the style of space will involve a lot more time and money.

How should you prioritise your renovations?

When you move into a new house or decide to renovate your family home it can be hard to know how to prioritise your renovations. There are several ways that you might choose to prioritise your renovations, with some of the most common being:


If you have a long list of renovations that you'd like to carry out, a good place to start is to order them by importance. Renovations that improve the safety or functionality of your home should be at the top of your list, followed by projects that are focused on the cosmetic appearance of the house. If there are issues with plumbing, your home's electrical wiring or key appliances such as your oven or cooktop, it's important to start with those first.

It's also important to consider how often you use each room you're considering renovating to ensure you make the most impact if funds are limited. Bathrooms, kitchens and bedrooms are all quite popular places to start, but your choice will depend on your home and your family.

Your budget

Understanding how much money you can realistically afford to spend on home renovations can be helpful if you're having trouble prioritising what to do first. If you only have a limited budget, you'll likely want to focus on essential work that helps to improve the safety and functionality of your home or the spaces that you use most. If you have a little more money to play with, you could think more about the overall appearance of your home.

Return on investment

If you're not sure where to start with your home renovation projects, another good way to prioritise your plans is to consider the return on investment that each type of renovation could provide. Although you might not be thinking about selling your home in the short term, the work you do now could reward you handsomely in years to come.

Remodelling your kitchen or bathroom generally helps to increase your home's resale value, as do improvements to the house's street appeal. Prioritising your renovations based on their long term return on investment can be a good place to start, especially if your budget is limited.

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