What you need to know before starting your home reno

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Home Renovation
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Team MONEYME|25 June 2024| 2-minute read

In both March and May, the Reserve Bank put interest rates on hold – and home owners all over Australia breathed a collective sigh of relief. 

For many, especially those with variable rate mortgages, this could mean more money for things besides monthly repayments. If you’re one of them, then perhaps your first reno is on the cards. 

How much will your first reno cost?

Of course, the cost of your first reno will vary, depending on the size of your property and the scope of your plans. While a quick makeover of your living room might range from $7,000-$15,000, a bathroom renovation might cost anywhere between $10,000 and $35,000, according to Canstar.

Even though interest rates have stabilised and inflation has eased, building costs have remained stubbornly high. It’s important to put together a thorough, detailed and realistic budget, which should include:

  • The costs of all materials, from nuts and bolts to cupboards and sinks (and everything in between);
  • The hourly rates of all professionals involved, from designers to project managers to tradies;
  • Expenses arising from being unable to use your property; for example, you might need to eat out while the kitchen’s under construction, or, in the case of a more extensive reno, stay in a hotel for a few weeks; and
  • Potential unexpected costs, such as the reno extending beyond its timeline. 

How to finance your first reno

The first step is determining how much money you have at your fingertips. This may include savings arising from stable interest rates and lower inflation, as well as long-term savings. 

If your current money won’t stretch far enough, then you might consider borrowing. One option, particularly for a major project, is refinancing your mortgage. This involves renegotiating with your current provider, or a new one, to borrow more money. In the process, you can often secure a lower interest rate. It’s important to be aware of any fees arising, and smart to make sure that, in the long term, refinancing for a reno will be financially beneficial. Be aware though that you will pay interest on the additional money you borrow over the life of the mortgage.

Another option is taking out a personal loan, which can often be a better choice for smaller projects because you will only pay interest over a shorter period – usually 3 or 5 years for a personal loan. MONEYME offers loans of up to $50,000 at competitive interest rates. Applications are online, and funds are often available in as little as an hour. 

Making the decision

Renovating is a big decision, which not only costs thousands of dollars, but also causes inconvenience. However, it can also add significant value to your property in the long run – so, with careful budgeting, the investment could be very worthwhile.  

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