Setting your Renovation Budget

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renovation budget

How to set your renovation budget

Renovation budget is one of the must asked questions by IDs. ID need to know how much you are willing to spend so that they know what can be done with that amount of money. Rule of thumb for setting renovation budget is “buy what you can afford”.

Homeowners who are wealthy enough to have no renovation budget constrain, you might still want to let your ID know how much you are willing to spend.

For a 5 room HDB resale or 3 bedroom private condo, you should be able to renovate your home to your fancy and purchase good quality accessories with $150,000 excluding extreme high end accessories e.g $10,000 sofa set.  Maybe you can work your way back from here by deducting the accessories cost and determine your renovation budget for your ID.

Realistic renovation budget is important.

You do not want to pay through your nose for something that you cannot afford.  If you have limited cash and do not wish to take any loan or small loan amount, then work your way back starting from your cash with loan by deducting the accessories cost.  With a total fund of $65,000, using my minimum estimated cost for accessories, you will have a renovation budget of $43,500 for your ID.

Full renovation loan without cash

Beware not to over commit yourself. Many people over commit themselves just on the loan without thinking of the extra expense they need to spend on their accessories.  Do a financial plan for the whole renovation. Think of where are you getting your money for the rest of the rest of the accessories. At least at the end of the day, you know that you are renovating at cost which you are comfortable in.

Do not declare the full amount to your ID in your first meeting.

Provide him with about 85% of your renovation budget for him to work on. Reason is because a lot of IDs will try to stretch your budget to the maximum by coming out with a renovation contract that is worth 10% – 20% more than your budget. Therefore, if you declared a lower budget to your ID, you will always keep your renovation budget under control or within your planned budget.

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