Renovation Project Coming Up? Check Out These Budgeting Tips!
When renovating your bathroom, kitchen, or entire home, deciding what you want is simple. However, planning and creating a budget for the renovation project can be challenging. Determining how much money you can allocate to the assignment is often tricky. Although there are techniques to make it easier, if you’re seeking helpful advice on how to establish a budget for your next renovation project, carefully review the following tips:
Estimating Total Expenses
If you’re considering hiring a renovation contractor or design professional, it’s important to discuss your ideal renovation project with them to obtain an estimate of the total costs. This will give you a better understanding of the expenses of your renovation project, whether a bathroom remodels, kitchen renovation, or complete home overhaul.
Determining Your Spending Limits
After calculating the estimated costs for your kitchen or bathroom renovation project, the next step is determining the funding source. If you have sufficient funds available, it’s straightforward. However, if you need to secure a loan from a bank or financial institution, it’s essential to understand how it will affect your monthly expenses. There are two primary types of loan options to consider:
Line of Credit or Equity Line Loans If you are disciplined with your finances, equity line loans can be advantageous. This type of loan is usually secured by your home equity, qualifying you for a lower interest rate than other loan types. Additionally, you can deduct the loan interest from your taxes. The minimum amount payable is only the interest charged monthly, and you’re not obligated to pay the principal amount. Although similar to the minimum amount due on a credit card each month, it’s challenging to get out of the loan.
However, you can set up a repayment schedule to pay off the principal amount. For example, in addition to the monthly interest on the loan, you can pay 1/120th of the principal amount for a 10-year loan term or 1/60th for a 5-year loan term. Consider other loan options if you cannot commit to this repayment plan.
Get Quotes from Various Contractors and Renovators
Before seeking quotations for your kitchen renovation project, it is crucial to have a clear idea of your specific requirements for kitchen benchtops, sinks, and taps. Writing these details down will ensure that all potential renovators provide accurate pricing for the same items.
Ask for recommendations from neighbors, friends, and colleagues to find at least three contractors to consider. Provide each contractor with a detailed description of your renovation project and precise product lists, and request an itemized quote.
To ensure you find the right contractor, ask for examples of their recent work, check references, and explore websites offering peer reviews of renovators/contractors.
Once you have selected a contractor, adding 20% to their estimated quote is wise to account for unexpected expenses and any revisions necessary during the project.
Trimming Down Your Project to Match Your Budget: Defining Priorities
If your dream renovation exceeds your budget, adjusting your expectations and considering cost-cutting measures is wise. Your contractor can provide helpful suggestions to keep the project within your financial means. Here are some options:
- Scale back the project: You can reduce the size of the bathroom extension from 90 to 70 square feet, for example.
- Choose more affordable materials: Laminate benchtops are a budget-friendly alternative to granite or quartz-engineered stone benchtops.
- Purchase items yourself: Buying materials, fixtures, and appliances on your own can save up to 20% of your project costs. However, it’s essential to inform your contractor of your efforts.
- Keep existing items in good condition: Appliances, lighting fixtures, and other items can be upgraded later, so retaining them will help you save money in the short term.
When the time comes to manage your renovation project, keep the points as mentioned earlier in mind. Whether you plan to renovate your current kitchen, bathroom, or home, working with a licensed and reputable plumber and electrician is crucial to handle any necessary plumbing and electrical work.