When planning your renovations, one of the most important elements to consider is your budget. It’s only once you’ve established a realistic budget based on your scope of work that you should move forward with the rest of your project (e.g. architectural drawings, materials selection, construction phase).
Billdr understands that each homeowner has their own constraints when it comes to budget allocation, so this guide is meant to help you through your own budget setting process.
Why is it essential to establish a renovation budget?
Setting your budget gives your project manager a better idea of what is feasible within the scope of your project, so that they can suggest renovation work that’ll help you achieve your goals while remaining reaslitic. Often, homeowners will have an ambitious renovation wishlist, but might lack the industry knowledge to understand whether the kind of work involved is possible and how much it would cost. By sharing details of your budget with your project manager, the latter can fill in those knowledge gaps and provide you with a solution that better fits your renovation needs.
How do I calculate a high-level budget?
A high-level budget is the amount of money you are willing to invest in your project based on its scope. The purpose of setting this budget is to determine how much your project will cost before you get too involved in the finer details (such as selecting finishing materials).
To create this budget, you must start by determining what your renovations needs are — those will then make up what is known as the project’s scope. The next step is to gather cost estimates. Our project planning service simplifies this process by providing you with estimates instead of having you fiddle around with different tools online. Upon receiving a Billdr estimate, you will also get a detailed scope and budget that will help you determine how much each component of your project should cost, allowing you to prioritize which tasks to complete.
How can I prepare for contingencies?
Taking the time to plan your renovation project right from the start will lead to a more accurate cost estimate. While good preparation may reduce uncertainties, unforeseen circumstances can still come up — and when they do, plans will need to be adapted to complete your project. These adaptations are known as change orders which modify the original contract.
It is thus important for you to reserve some funds to account for potential change orders when you’re establishing your budget. We recommend that you set aside 10-15% of your budget as a contingency plan. Through Billdr’s project planning service, you’ll be able to minimize these additional costs as we provide you with a detailed breakdown of all the tasks that will need to be completed during your construction phase.
How can I get financing for my renovation project?
Depending on your budget and financial situation, there are a few options available for financing your renovation project:
Cash: Use money that you have available in your own bank account.
Home equity line of credit (HELOC): If you have equity in your property, a HELOC lets you use your home as collateral, which allows you to borrow at a lower interest rate than if you were to paid for an unsecured loan.
Refinance: Depending on your mortgage terms, it could be beneficial to refinance your home, pulling out the equity that you have built up to use it towards your renovation project.