Blog Budgeting tips when renovating

Budgeting tips when renovating

17 July 2020
Budgeting tips when renovating

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Renovating your home doesn’t need to cost you an arm and a leg if you’re savvy and know where to cut back and save.

Here are our top five tips for renovating your home on a budget.

1. Take advantage of your tax return

It’s tax time and we all know what that means! More money back in your pocket. It’s important you don’t let it go to waste by blowing it all online shopping - consider spending it wisely by adding it to your renovation budget.

2. Affordable fixes

There are lots of affordable fixes you can make that will have a huge impact on the look and feel of your home. Simple things like repainting the walls, changing the light fixtures, putting in new flooring, repainting cabinetry and even changing the handles can make a big difference.

3. Use the HomeBuilder grant

If a renovation was on your to-do list for 2020, the Government may be able to contribute $25,000 towards it. All types of homes (apartment, house and land packages, off the plan, free-standing houses, etc) will be eligible under the scheme. You may be eligible if:

  • The home is previously valued at less than $1.5 million

  • You must be spending between $150,000 and $750,000 on your renovation

  • You are an Australian citizen over the age of 18

  • You are on an income of less than $200,000 for couples and $125,000 for singles.

However, you won’t be eligible for the scheme if you’re an owner-builder or if you’re planning to renovate an existing home as an investment property. You also can’t use the grant for additions to the property that aren’t connected to the home, so tennis courts, swimming pools, sheds, garages, or outdoor spas or saunas are out of the question.

4. Consider using equity

Equity is the difference between the market value of your home and your remaining home loan balance. Put simply, it’s the value of what you currently own in your home.

If you want to fund a big-scale reno, you can use your existing equity to top up your renovation budget by applying for a ‘Home Equity Loan’. To find out how much equity you have in your home, you may need to get a property valuation done through your lender. They will also assess your current loan to value ratio (LVR) to ensure some equity is held as security for the loan. This can also help you determine how much equity is left after refinancing.

Applying for a home equity loan is very similar to applying for a regular home loan. Lenders will take into account your income, expenses, your credit history, borrowing capacity, and the market value of your home.

5. DIY

Fancy yourself as a bit of a handyman (or woman)? If you’ve ever watched The Block, you’ll know that even the most novice renovator can easily do a bit of painting or simple tiling to save money.

Remember to always use the professionals for plumbing, electrical and structural work though, as getting this wrong can be extremely costly and dangerous if you don’t know what you’re doing.

If you’re ready to start renovating, check out some of our construction loans, or book an appointment with one of our friendly lending specialists to organise your loan pre-approval.

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