Make a realistic budget and stick to it - while this may be easier said than done, you can avoid some of the more common causes of overspending.

Don't overcapitalise

Many people know what it's like to go over budget with home renovations. It's one the commonest mistakes we make. Sometimes we recoup this outlay when we sell the property, but often we don't. It leads to overcapitalisation, financial loss and a great sense of personal disappointment.

Some people simply spend so much on their renovations they make their home the most expensive one on the street, thereby pricing it out of competition.

So the key is to choose work that will genuinely improve your lifestyle and make your home more attractive without putting it beyond the reach of a potential future buyer.

So firstly, determine in advance how much you should spend. The single guiding principle should be that the amount you budget for renovations is linked to the home's value. As an example, never spend more than 15% of your home's total market value on renovating the kitchen because experience shows that you are highly unlikely to make that money back if you sell.



Once you've determined your plans, get them costed. You can do this with the help of a builder or a professional cost estimator. Make sure you make
allowances for all of the hidden costs like professional fees and insurances. You should also always factor in a contingency of 20% to cover unknowns. Now compare this with what you can borrow.

If your house has accrued in value since you bought it, you may be able to use this equity to convince your lender to increase your loan based on this increase. Or if you've made extra repayments on your mortgage you may be able to redraw these funds to fund your renovation. These options will help you avoid the expenses associated with setting up a new loan from scratch.



While the cost of construction will be a big part of any budget, it is often matched by the cost of the fit-out. This is the cost of all the items that you now feel you need to put into the renovated space to finish the job and do it justice. You need to identify all of these items and see how they fit into the budget.

You can always look at ways of keep the budget manageable by doing some of the work yourself. Look at where the costs are and what you can do. 

You should also always look for alternatives in your planning of the project. Speak to professionals about other options. The most expensive doesn't necessarily mean that it's the best. You should examine recyclables to see if they come in cheaper and still do the job.

One reason people go over budget is that they get carried away with the excitement of newness. You might think that exclusive Italian tap-ware is worth every cent, but if you are renovating to sell your home will the prospective buyers know the difference? Perhaps a less expensive version would do the job just as well.

You should also look for other ways to access the products you want. Can you get them cheaper buying over the internet or at auction? Both avenues can deliver surprising savings. If your renovation has a reasonable lead time you might buy items as you see them on special and store them until they are required.


When considering the design and fit-out remember that one day you may want to want to sell the property, so don't go too overboard in creating unique designs that are merely faddish and may alienate others later.

When budgeting for major projects remember that you may have to move out while extensive interior work is being done. It's not just a question of noise and workmen everywhere - there will be dust, debris, and furniture out of place. There may even be hazardous materials around. You'll need to budget for alternative accommodation.

Possibly the hardest part of the task is actually sticking to your renovation / redesign budget. Too often the heart rules the head and we make impulsive decisions without looking at the big picture. As a rule, then, once you start your project don't commit to expenditure that has not been budgeted for.
And if extra spending is absolutely unavoidable, look long and hard at where else within the project you can make savings.

Following these basic rules should help you deliver your project on budget.