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How to Avoid Going Over Budget on a Renovation

How to Avoid Going Over Budget on a Renovation

Any kind of home renovation, big or small, involves planning and budgeting – the two go hand in hand. We’ve compiled a few guidelines to help get you on the road to a smooth and successful renovation, without going over your outlined budget.

1. Estimating Costs

Depending on the kind of renovation you are planning, consulting with a professional contractor or an interior design expert is one of the first steps you should take in estimating costs. A contractor or designer will be better able to help you understand the costs associated with room additions or any other major upgrades made to your home.

Increased Costs

It’s important to be aware that any time structural changes are made through framing, movement of walls or any other major structural adjustments such as foundation fixes, roofing upgrades, plumbing, wiring or other changes, your construction costs are going to increase.

Engage a Home Inspector

To help prevent and save on unsuspected changes and unplanned adjustments that can happen in a renovation situation, consider hiring a home inspector to go through your home to look for any visible problems or potential issues before getting started.

Inspection Dates

In addition, once a renovated area is ready for inspection, keep the date of inspection recorded in a journal or on a calendar, so you can remain up-to-date with inspection deadlines. It is important to be responsible for any paperwork involved in the inspection and permitting process.


If you decide to assess expenses on your own, be prepared to work with a tight schedule. You’ll likely also be responsible for contacting building material suppliers, home stores, online suppliers, local contractors, subcontractors and inspectors, as well as city, country or state offices that issue required permits for home additions and renovations. Purchasing local materials and using local contacts can help you keep track of your project schedule and costs.

Production Time Setbacks

It is easy to go over budget on materials, contractors, subcontractors and other miscellaneous expenses, along with costly time delays, material acquisitions and labor performed. All of these factors can set back production time and increase labor costs. Consult with an expert adviser to learn how to deal with time constraints, renovation changes and possible budget overruns before construction begins.

2. Determining Priorities

Before consulting with a professional, establish your priorities concerning what you want to happen with your home renovation. Renovations can be time-consuming and costly, so it’s important to establish a detailed plan for your renovations to understand your possible budget and approximately how much time the project will take. You may have to cut back on your plans because of time and budgeting concerns.

Include Specifics

Once you know and understand the most common renovation roadblocks, go ahead and include all the specifics for your renovation that deal with even the smallest of details. Think about framing, plumbing, wiring and drywall changes, along with aesthetic choices concerning paint, flooring, countertops, cabinetry, kitchen and bathroom fixtures, built-ins, lighting, windows, window treatments, door installations, wallpapering, tiling, any exterior work and any custom design elements.

Find a Contractor

Once you have all the specifics lined out, look for several contractors who are licensed, trustworthy and experienced in completing renovation work similar to your own project. Get recommendations from neighborhood friends and others involved in detailed construction work, and check online for contractor reviews.

After you have decided on a few reliable contractors and have checked their references, meet with them to supply your renovation plans and projected materials list and ask for a bid. Whatever bid you decide to go with, add an extra 15-20 percent for any sudden project problems or changes. If the bid total plus the added extra is beyond your capabilities to pay, then you may want to consider streamlining your project to accommodate your budget.

3. Financing

When you have established a clear figure for your anticipated renovation costs, the next step is determining how you plan to pay for your renovations—whether through savings, gifted money or a home loan from your bank or another lending institution. You should consider scheduling a meeting with a financial adviser through your bank or lending institution to discuss your budgeting options for a renovation. Be sure to ask pertinent questions concerning interest rates and the options available to you.


If you are opting for a loan and meet all necessary qualifications, you will probably be offered choices such as a home equity loan, a HELOC ( home equity line of credit) or a cash-out-refinance.


A cash-out-refinance means that an existing mortgage loan is refinanced, and a new mortgage loan is made for an increased amount above the already existing mortgage loan. As a borrower, you will receive the difference between the original or old mortgage loan and receive the new loan in cash.

Home Equity Loan

A home equity loan allows you to borrow against what you have already invested in your home – the equity. The amount is the difference between how much your home is worth and the debts that are owed against your home, which is probably your mortgage. This type of loan has terms and as a borrower, you will receive a lump sum. Repayment is over a fixed amount of time, with an established interest rate and a monthly payment plan.


A HELOC or home equity line of credit is secured through the equity you have in your home. With this type of loan, a homeowner can qualify for a lower loan rate and any interest can be deducted on taxes. As the loan is considered a line of credit, as opposed to one large sum, a borrower is issued an actual checkbook for withdrawal when needed, which can be equal to the loan amount.

HELOC Drawbacks

The drawback with this type of loan is that a minimum payment is only the interest with no requirement to pay on the principal. This process could quickly create a debt and over-budget situation. To avoid that from happening, it’s important to create a repayment schedule that works for you and the bank, which can be accomplished through paying a large amount of the principal for a five-year period or for a ten-year period along with monthly interest.

4. Scaling Down

If you find yourself about to be over budget or simply cannot meet the costs of a renovation in spite of a loan or other funding, consider scaling down your project to only what is critically important and necessary for your household. Speak with your contractor about how you can cut costs on your project.

Suggestions will probably include:

  • Using lower cost materials in place of high-end building products

  • Retaining what you already have in your home in the way of fixtures and appliances

  • Paring down your project size

  • Purchasing materials, products and large appliances on your own, with the help of your contractor

Avoiding going over-budget on a renovation can be challenging, but it can be accomplished by following some of these tips and working with your contractor to get the best bang for your buck. Remember, you always have the option to cut back and minimize your project and continue later with any additional improvements you’d like.

If you’re making plans to renovate your home on a budget, we’ve got you covered! You’ll find all the products your home needs for your renovation projects at any of our locations, along with our friendly and helpful staff to help you throughout your renovation project.


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