How much does an average home renovation cost?

Estimating the cost of a home renovation can feel a bit like estimating the length of a piece of string. The answer will vary depending on the type of renovation, your personal financial situation, and a wide range of other factors.

According to HiPages, the national average costs for renovating different rooms are:

• Kitchen: Between $10,000 and $45,000
• Garden: Between $2000 and $10,000
• Bathroom: Between $10,000 and $35,000
• Living Room: Between $10,000 and $15,000
• Bedroom: Between $2000 and $35,000

These costs could vary significantly depending on the size and scope of your project, as well as the area where your property is located. For example, homeowners in capital cities such as Sydney or Melbourne may find that their renovation budgets are higher than in other areas.

Your renovation costs could also vary significantly based upon the current price of materials and labour. For example, while home building and renovation activity surged during the COVID-19 pandemic, in part thanks to support from the government’s HomeBuilder program, supply chain issues made it more challenging to source building materials.

How to budget for a home renovation

A renovation project could be at the lower end of the potential budget if you stick mostly to more basic and cosmetic upgrades, such as replacing existing fittings and fixtures. You could also look into doing some of the work yourself, such as painting your walls, though this may use up more of your available time and the results may not match what you’d expect from a professional. 

A more involved renovation may require expertise from professional tradies such as plumbers, electricians, cabinetmakers and more. This, combined with the extra materials and time that will likely be required, could lead to the price of your renovation rising.

It’s also important to remember that the final cost of a renovation rarely lines up exactly with the cost you predicted. It’s often recommended to leave an extra buffer in your renovation budget (such as 10 per cent) to help cover any unexpected extra expenses.

How to finance your home renovation

Don’t have enough money in your savings account to pay for a renovation outright? There are several finance options available for home improvement projects, such as:

Home improvement personal loans

Taking out a personal loan to help pay for your renovation can help you to keep your project budget separate from your mortgage and other finances, which may be simpler to manage. Selecting a flexible line of credit could allow you to cover the costs of a reno project over time as you can make withdrawals and repayments as required. Borrowing your reno budget as one lump sum means you can make regular repayments and steadily progress towards repaying the debt over time.

Home equity loans

Refinancing your home loan and borrowing extra money could be an option for paying for your home renovation project. While this means your mortgage may take longer to pay off in the long term and cost you more in total interest charges, renovating the property could also help to grow your home’s value more quickly. Alternatively, you could use your home equity to secure a separate loan to pay for your renovation project, whether that’s to be repaid in instalments over time or to be used as a line of credit.

Credit cards

Only have a relatively small renovation project in mind? You may be able to put it on your plastic. Just keep in mind that credit card interest rates can be on the higher side, especially if you’re paying tradies in cash and taking out cash advances.

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