How to Fund a Renovation Project?
We, Australians, are big on renovations. According to the reports by the Australian Bureau of Statistics, the home renovation value exceeded a billion dollars for the first time in 2021. Interestingly, Aussies spent more on home renovations during the pandemic years than at any other time since records began 50 years ago. Fair enough, as the travel plans were in limbo for over 2 years!
But also, this love affair with renovations makes sense as they’re far more cost-friendly than buying a new property. Home extension builders in Sydney can help you revamp your home and boost its overall worth. You’d enjoy the indoors more and make a profitable investment for the long-term!
However, transforming your home from banal to brilliant isn’t cheap either. If you’re not careful, you may end up splurging all your savings. But what if you don’t even have sufficient funds in hand, as most people don’t?
In that case, home renovation can be a decision-heavy process. How much to pay, how to figure out the finances, where to pay more and where to not… the list goes on!
But don’t fret just yet. We’re here to make your home renovation simpler! Our blog will introduce you to the most-friendly home renovation funding sources. You can also jump to the section where we tell you the splurge-worthy sections of the renovation!
The Best Financing Options to Fund Your Home Renovation
As leading home builders in Sydney, we present the following home renovation financing options for you –
1. Home Equity Loan
If you purchased your home a few years ago, you may have built up some equity in your home. Tap into the equity in your property to fund your renovations. Speak with a finance broker to ensure the cost of the improvements aren’t more than the equity you have available.
2. Home Loan Top Up
If you’ve taken a home loan in the past, a loan top-up is one of the best financing options. You can borrow an added sum of money without having to refinance or take out another loan. It increases your total mortgage balance so you can access cash for your renovation.
Do you know what is the greatest advantage of a home-loan top-up? You’ll get it at the same low-interest rate you had before!
3. Redraw Facility
If your home loan has a redraw facility, you can withdraw any additional repayments you made on your home loan.
For example, if you’ve had your home loan for 8 years and been paying an extra $200 every month, you would have paid an additional $19,200 off your mortgage. You can withdraw this cash and use it for your renovation.
4. Construction Loan
Construction loans are for sizable extensions or complete knock-down/rebuild projects. Here, the bank will take the value of your home after the renovation into consideration.
Please note that you don’t get a lump sum money here. Instead, your lender will agree to a schedule of progress payments invoiced throughout the project.
5. Line of Credit
If you would like access to the funds under your limit whenever you need them, a line of credit is a good option. It is quite flexible — you only pay interest on the funds you have used and you can reborrow the funds as you repay them without applying again. Saves time, right?
Pro Advice – Where to Save and Where to Splurge While Renovating?
If you’re renovating for the first time, let us, as home extension builders, tell you that your budget can quickly go from manageable to astronomical. You don’t want to disrupt your planned finances, do you?
So you need to be clear from the first day where you should spend your money and where you should go the extra mile.
House floors are noticed by everyone but are always forgotten. But don’t forget — they are the unsung masterpiece of your house! Be willing to spend money on flooring, as cheap ones are not durable.
However, when it comes to bathroom flooring, just ensure it’s slip resistant. Don’t go high-end and spend the leftover money on bathroom faucets.
It’s the small additions in the house that make a big visual and functional impact. Brass taps, decorative handles, stylish door knobs and shower heads are tiny details, but paying for good quality is worth it. Poor fittings would need repair whose costs would negate any upfront savings.
Ensure you do the math before because fittings are needed everywhere in the house, and the cost can add up quickly.
Doors and Windows
Not many people think about the doors and windows. However, high-quality doors and windows go a long way in imparting an upscale, impressive feel to your residence.
The entry door is for curb appeal, and window frames and substantial interior doors add a touch of style to your home.
Lighting impacts the whole ambience of your home, and thus we encourage you to choose unique light fixtures. However, do not buy the first quality lights you like. Instead, go on a hunt for discounted prices for light. A little comparison light shopping can save you bucks.
Sinks and Tubs
A fancy sink or bathtub does look pleasing to the eyes. However, it’s also extravagant if you’re on a budget. Instead of sticking to that one ceramic white, which will break your back while cleaning, go for durable stainless steel options.
A pro tip – Home services experts are of the opinion that the sweet spot for kitchen renovations is around 10% of the sticker price of the home, and for bathrooms, it’s about half that. You would want to remember this!
Whether you’re turning an old basement into a home theatre, installing a new pool and deck, or creating a master bedroom, a home renovation allows you to turn your dream home vision into reality.
While renovation decisions come down to personal preference and budget, staying clear on the must-do and must-not-do can help you get through the process without any regrets.
Get started with your dream renovation project with Brickwood Homes. We’re a renowned house and granny flat builder in Sydney, ready to give your home a more refined, tailored look. Contact us today to get a free quote.